TLDR The CFTC blocked Kalshi’s plan to unwind and refund Michigan trades, ordering the exchange to honor them under normal rules instead. Kalshi had filed an emergency rule change on July 12 after a Michigan court ordered trades to be voided, cancelled, and refunded. This is the first time the CFTC has used emergency powers to override a state court’s move to cancel already executed prediction market trades. Kalshi says it had already unwound the trades under the Michigan court order before the CFTC rejected the filing. The CFTC has also taken legal action against several other states, including Arizona, Illinois, New York, and Wisconsin.
Kalshi has found itself stuck between two different rulings this week. A federal regulator and a state court gave the exchange conflicting instructions on what to do with trades placed by Michigan residents.
The Commodity Futures Trading Commission ordered Kalshi to honor trades held by Michigan customers. The regulator told the exchange to process the contracts as usual, rather than cancel them.
This came after Kalshi tried to do the opposite just days earlier. On July 12, the exchange filed an emergency rule change that would have unwound the trades and refunded customers.
Kalshi made that move to comply with a Michigan court order. The CFTC stepped in and stayed the proposal before it could take full effect.
How the Dispute Started
The conflict began on June 29, when a Michigan court issued a temporary restraining order. That order stopped Kalshi from offering sports contracts to residents in the state.
The court did not stop there. It later ruled that trades already made by Michigan residents had to be voided, cancelled, and refunded.
Kalshi said the order only affected sports positions matched between Michigan traders and its own trading arm. The company