The Trump administration took an extraordinary step this week to escalate its nationwide efforts to prevent states from regulating prediction markets, where users can trade on real-world events like sports, politics and pop culture.
The Commodity Futures Trading Commission, the federal agency that regulates prediction markets, directed Kalshi not to cancel pending sports trades in Michigan, in defiance of a court order from a state judge.
The rare CFTC order cited emergency powers that haven’t been invoked since President Jimmy Carter’s grain embargo against the Soviet Union during the Cold War.
Kalshi said it had already complied with the judge’s order, and the volume of unwound trades was relatively small – which means the legal standoff might be moot for now. But this maneuver was the CFTC’s most aggressive and surprising step yet in its efforts to stop states from reigning in prediction markets.
“This hasn’t happened in 46 years,” said Robert Schwartz, the agency’s former general counsel, of the CFTC using its emergency authorities. “And it’s an assertion of federal power in financial markets like we haven’t seen so far, by countermanding a court order.”
