Prediction platform Kalshi’s troubles in Michigan appear far from over. A local court recently ordered the company to suspend all contracts on sports events and geofence state residents by August 12, 2026. While Kalshi has moved to comply with these requirements, a conflicting ruling by the Commodity Futures Trading Commission (CFTC) has banned the company from cancelling previously executed trades.
The CFTC Contradicted the Court’s Ruling
In June, Michigan became the second state to ban prediction platform Kalshi, following Nevada’s example. While the company announced it would fight the court ruling, it nevertheless agreed to comply with the geofencing requirements. Michigan Attorney General Dana Nessel argued that Kalshi’s sports event contracts constituted another form of wagering and were illegal in the state.
The court sided with the state, ordering the platform to stop offering sports-related contracts to Michigan residents. Ingham County Circuit Court Judge Rosemarie Aquilina argued that Kalshi lacked sufficient player safeguards compared to traditional sportsbooks. She also believed that Kalshi was offering sports betting under the guise of financial instruments, leading to a temporary injunction against the company.
The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations.
Michael S. Selig, CFTC chair
However, the CFTC issued its own ruling this Tuesday, prohibiting Kalshi from cancelling pending trades following the court order. CFTC chair Michael S. Selig stressed that state regulators could not interfere with federally regulated platforms. He added that federal law prohibited Kalshi from discriminating against a state’s residents and feared that cancelling trades could damage the broader financial market.
State Regulators Continue to Clash with the CFTC
These competing rulings leave Kalshi in a strange position, as it is unable to follow the court’s order while simultaneously complying with the CFTC’s ruling. Robert J. DeNault, Kalshi’s legal counsel and head of enforcement, posted a seemingly frustrated message on X, noting that the platform had already followed the Michigan court’s order and unwound the trades.
We are being put in an impossible position, looking to follow state court orders that may contradict our federal regulatory obligations.
Robert J. DeNault, Kalshi legal counsel and head of enforcement
The CFTC’s statement also prompted a response from state officials. Danny Wimmer, press secretary for Michigan Attorney General Dana Nessel, noted that the ruling directly undermined the state’s efforts to regulate sports betting operations on its territory. Michigan officials have been adamant that all prediction platforms offering sports-event contracts must secure a local license.
Just as any other company that seeks to operate in Michigan, Kalshi should be required to follow the laws of Michigan.
Danny Wimmer, Michigan Attorney General press secretary
Such disputes underline the growing tensions between state and federal regulators. The CFTC has filed lawsuits against several states that attempted to restrict prediction markets, including Connecticut, Arizona, New York, Illinois, and Wisconsin. According to the federal agency, prediction platforms constitute financial instruments and are not subject to state oversight. However, conflicting court rulings mean that the dispute is far from solved.