The U.S. Commodity Futures Trading Commission (CFTC) intervened Tuesday to halt Kalshi’s compliance with a Michigan court order requiring cancellation of customer trades, asserting federal preemption over state legal actions involving its regulated markets.
The CFTC argued that Michigan’s directive contradicts federal mandates governing the designated contract market (DCM), emphasizing its exclusive authority to enforce trading regulations under the Commodity Exchange Act. This marks a direct challenge to state attempts to enforce local rulings against federally regulated entities.
“The commission will not allow states or state courts to bully registered entities into violating CFTC regulations,” stated Chairman Mike Selig, underscoring agency stance against state-level interventions. Selig, a proponent of deregulating prediction markets, has previously clashed with jurisdictions restricting such platforms through gambling bans.
This escalation follows Kalshi’s prediction market—a CFTC-approved DCM since 2013—being a catalyst in legal battles over state definitions of “illegal gambling.” The CFTC noted Michigan’s case is the first instance where courts targeted trade settlements themselves, rather than penalizing the company for offering contracts.
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