CFTC Orders Kalshi to Honor Michigan Trades in State Clash

The Commodity Futures Trading Commission has ordered prediction market Kalshi to honor trades placed by Michigan residents, directly overriding a Michigan court that told the exchange to void, cancel and refund those same trades. The order, issued on 14 July 2026, is the first time the federal regulator has used emergency authority to stop a prediction market from unwinding executed contracts, and it turns a state licensing dispute into a constitutional test of who controls sports event contracts in the United States.

New CFTC Chairman Michael Selig framed the move as a defense of federal primacy over designated contract markets. Kalshi, which said it had already unwound the trades to comply with the state court, called the competing orders an "impossible position." The clash sets Washington against a growing bloc of states that argue Kalshi's sports contracts are unlicensed gambling.

What did the CFTC actually order Kalshi to do?

The CFTC directed Kalshi to fulfill the disputed Michigan trades and to keep operating "in accordance with its normal practices" rather than cancel and refund them. In plain terms, the federal regulator told a company it oversees to ignore a state court instruction. The agency argued that a designated contract market, the federal category Kalshi holds, cannot be forced by a state to breach its obligations under the Commodity Exchange Act, and cannot discriminate against residents of any single state.

Why is this a fight between the CFTC and Michigan?

The conflict stems from opposing legal theories about what Kalshi sells. Michigan treats Kalshi's sports event contracts as sports betting that requires a state gaming license, which Kalshi does not hold. The CFTC treats the same contracts as federally regulated derivatives that sit outside state gambling law. Both cannot be true at once, and each side now has a live order on the table pulling Kalshi in the opposite direction.

Key facts on the CFTC Kalshi Michigan order

• 14 July 2026: the CFTC ordered Kalshi to honor Michigan trades and operate normally, according to Gambling Insider and The Block.
• 29 June 2026: the Ingham County Circuit Court issued a temporary restraining order barring Kalshi from offering sports contracts in Michigan.
• 6 July 2026: the court clarified that trades placed by Michigan residents must be voided, cancelled and refunded.
• 12 August 2026: the deadline set for Kalshi to geofence Michigan and stop serving the state.
• First use of CFTC emergency authority to prevent a prediction market from unwinding already executed trades.

What is the timeline of the Michigan Kalshi dispute?

The standoff escalated fast over roughly two weeks. On 29 June the Ingham County Circuit Court granted a temporary restraining order stopping Kalshi from offering sports-related contracts in Michigan. On 6 July the court went further, ordering that trades already entered by Michigan residents be voided, cancelled and refunded, and it set 12 August as the date by which Kalshi must geofence the state. Michigan regulators had already extended their action against the exchange and attached fines of up to 500,000 dollars a day for continued sports contracts, as iGaming Daily News reported. On 12 July Kalshi filed an emergency rule with the CFTC proposing to liquidate the affected positions, and on 14 July the CFTC responded by ordering the exchange not to unwind them.

What did CFTC Chairman Michael Selig say?

Selig used unusually direct language, casting the order as a stand against state overreach. He argued that federal registration cannot be overridden by a state courtroom.

"A state cannot force a DCM to violate its obligations, and federal law does not permit a DCM to discriminate against a state's residents. The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act." Michael Selig, Chairman, CFTC

Selig added that canceling trades that have already 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."

How has Kalshi responded to the competing orders?

Kalshi said it was caught between two regulators giving opposite instructions, and that it had already complied with the state court before the federal order arrived. Robert DeNault, the exchange's head of enforcement, said the company was "disappointed by this decision" and that it had "already acted and unwound the trades," describing the position as being asked to obey a federal order and a state order that cannot both be satisfied.

What are prediction market sports contracts?

Kalshi's disputed products are event contracts that let users trade on the outcome of sporting events, paying out based on whether a stated result occurs. Kalshi lists them as federally regulated derivatives under its designated contract market status, the same legal footing as commodity futures. Critics in state gaming agencies say a contract that pays out on the result of a game is a bet in everything but name, which is the core of the definitional fight now playing out.

How does this compare with other state actions against Kalshi?

Michigan is one of many states challenging Kalshi, and the CFTC has taken the opposite side across the board. The federal agency has moved against state actions in a wide group that reporting places at Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin. The pattern is consistent: states issue cease and desist orders or sue, and the CFTC asserts that only it can regulate the contracts.

Actor	Position	Action
CFTC (federal)	Sports contracts are federally regulated derivatives	Ordered Kalshi to honor Michigan trades, 14 July 2026
Michigan court	Contracts are unlicensed sports betting	Ordered trades voided and refunded, geofence by 12 August
Kalshi	Bound by federal DCM status, complying under protest	Filed emergency rule, says it already unwound trades

Why does this matter for the wider iGaming industry?

The outcome will shape whether prediction markets can offer sports outcomes nationwide without state gaming licenses, sidestepping the tax and compliance regime that licensed sportsbooks accept. Licensed operators such as FanDuel and DraftKings pay state taxes and fund responsible gambling programs that Kalshi's model does not carry in the same way. If the federal position holds, prediction markets could reach every state at once. If states prevail, the sports contract category faces a patchwork of bans and licensing demands.

What happens next in the CFTC Kalshi case?

The immediate question is whether Kalshi can obey both orders, which on their face it cannot. Expect the dispute to move up through the courts, with the federal preemption argument at its center, and with the 12 August geofencing deadline acting as a pressure point. Other states watching the Michigan case will read the result as a signal on whether their own enforcement can survive a federal challenge.

Updated July 2026

This report reflects the position as of 15 July 2026, following the CFTC order of 14 July and the Michigan court instructions of 29 June and 6 July. iGaming Daily News will update the story as the courts rule and as further state or federal actions are filed.

Sources

Primary reporting via Gambling Insider and The Block.

Frequently asked questions

What did the CFTC order Kalshi to do?

The CFTC ordered Kalshi to honor trades placed by Michigan residents and to keep operating normally, rather than void and refund them as a Michigan court had directed.

Why did Michigan want the trades cancelled?

Michigan treats Kalshi's sports event contracts as unlicensed sports betting, so its court ordered the trades voided, cancelled and refunded and set a 12 August 2026 deadline for Kalshi to geofence the state.

Who is the CFTC chairman in this dispute?

Michael Selig is the CFTC chairman, and he said a state cannot force a designated contract market to violate its federal obligations.

Has Kalshi complied with the orders?

Kalshi says it already unwound the disputed trades to follow the state court, and describes the competing federal and state orders as an impossible position.

Which states have challenged Kalshi?

Reporting lists CFTC counteractions against state moves in Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin, alongside Michigan.