CFTC Halts Kalshi Trade Cancellations Ordered by Michigan Court

On July 14, 2026, the U.S. Commodity Futures Trading Commission (CFTC) issued an order preventing Kalshi, a prediction market firm, from canceling trades ordered by a Michigan court. The CFTC intervened after the Michigan circuit court mandated that Kalshi reverse trades made by its Michigan customers, following claims from the state attorney general that these represented illegal gambling.

The CFTC's order emphasizes its regulatory authority as it oversees trading operations at Kalshi, which operates as a designated contract market (DCM). CFTC Chairman Mike Selig argued that allowing state courts to interfere with the firm would undermine the integrity of contracts and could destabilize the prediction market sector. He stated, "The commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations."

This comes as part of a larger trend, with the CFTC actively defending its jurisdiction over prediction markets against several states that have sought to impose their own regulations. Selig indicated that the Michigan case represents the first instance where a state has directly attempted to meddle in trading activities. He warned that canceling executed trades poses a risk of eroding public confidence in the trading system, potentially leading traders to worry about the permanence and reliability of their contracts.

The CFTC's proactive stance indicates its commitment to establishing a regulatory framework that encourages the growth of prediction markets while asserting dominance over state-level legal challenges. The agency has faced multiple lawsuits from states aiming to regulate or shut down event contract businesses, which they classify as illegal gambling.

As the legal fight unfolds, observers will watch for further developments regarding how states and the CFTC navigate their overlapping jurisdictions in the increasingly complex landscape of digital markets.