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The CFTC has ordered Kalshi to keep running sports event contracts in Michigan and to settle all open trades normally, directly overriding a June 29 Michigan court order that told the platform to shut the contracts down and refund customers.
Kalshi had already started unwinding those trades to comply with the state court. The CFTC’s July 14 order reverses that, with Chairman Michael Selig arguing a state can’t force a federally registered exchange to break its obligations under the Commodity Exchange Act.
For Michigan players, the practical result: Kalshi’s sports event contracts stay live, at least for now, even as the company faces an August 12 deadline to geofence the state or risk fines starting at $500,000 a day.
How the Michigan-Kalshi Fight Started
The court cases began after the Michigan Gaming Control Board (MGCB) accused Kalshi of offering sports event contracts without holding a Michigan sportsbook license.
This led the regulator to issue a cease and desist order earlier this year because they believed betting on sporting events was betting outside the state’s regulated sports betting market.
Kalshi challenged that in federal court, saying it is a federally regulated prediction market overseen by the CFTC and therefore should not be subject to state gaming laws.
Michigan disagreed, and the legal fight has continued ever since.
Most recently, a Michigan court ordered Kalshi to stop offering its sports event contracts in the state while the dispute continues.
“A state cannot force a DCM [designated contract marker] to violate its obligations, and federal law does not permit a DCM to discriminate against a state’s residents. Canceling trades that have already been executed is an unprecedented step that risks a cascading effect on the entire marketplace and undermines the certainty in contracting that is a necessary component of a functioning market. The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations,” CFTC Chairman Michael Selig said.
Rather than comply with the state order, Kalshi received backing from its federal regulator.
According to the CFTC, allowing individual states to block federally approved contracts would undermine the national regulatory framework Congress created for designated contract markets.
Kalshi’s Volume Keeps Climbing Despite the Legal Fight
Despite the prediction market platform going in and out of different court cases, they have continued to grow. In trading volumes and in new markets, as well as partnerships.
This past June, Kalshi recorded $9.5 billion in trading volume. That stood out as its largest month in the history of the platform.
An overwhelming number, but the figures match as players can trade contracts on outcomes across the NFL, NBA, MLB, NHL, golf, tennis, soccer, and many other sporting events.
Another feat is their increased volume in women traders, thanks in part to entertainment contracts involving the Love Island reality TV show.
Nine States Are Suing Kalshi Right Now
The Michigan case is unlikely to end anytime soon.
Both sides are expected to continue arguing over whether federal commodities law overrides state gambling laws when it comes to sports event contracts.
Whatever the courts decide could influence similar lawsuits currently happening across the country.
And the CFTC is still fighting all those battles simultaneously.
“To protect the jurisdiction granted to it by Congress, the CFTC has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin. The Commission has also filed amicus briefs in the U.S. Court of Appeals for the Sixth and Ninth Circuits and the Supreme Judicial Court of Massachusetts,” a CFTC press statement read.
