The U.S. derivatives regulator stayed Kalshi’s emergency rule and used its emergency powers to require normal fulfillment of open Michigan trades, deepening a federal-state clash over prediction markets.
The CFTC ordered KalshiEX, LLC to fulfill open trades that a Michigan state court had directed the prediction-market operator to cancel, escalating a dispute over whether states can interfere with transactions on federally regulated derivatives venues. In Release Number 9267-26 dated July 14, the agency said it stayed an emergency rule change KalshiEX proposed in response to the court order and used its emergency authority to require the exchange to process the trades under its normal practices. Kalshi operates as a designated contract market under CFTC oversight. Chairman Michael S. Selig said a state cannot force a designated contract market to violate its obligations or discriminate against state residents, and warned that canceling executed trades could undermine market certainty. The CFTC said Michigan is the first state to try to interfere directly with executed derivatives transactions and pointed to related lawsuits and court filings in other states as part of a broader fight over whether prediction markets fall under federal derivatives law or state gambling law.