Kalshi Faces Federal Pushback as CFTC Opposes Trade Cancellations

The federal derivatives regulator that supervises Kalshi said Michigan overreached by pressuring the company to unwind completed trades. On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC) stepped in, issuing an order that prevents Kalshi from complying with a local court directive to cancel past customer transactions.

The move escalates the agency’s legal clash with state authorities, as the CFTC maintains it has exclusive jurisdiction over trading on Kalshi, which operates as a designated contract market under its oversight.

CFTC Chairman Mike Selig said the commission will not allow states or courts to coerce regulated firms into violating federal law or agency rules. A proponent of prediction markets, Selig has advocated for more supportive regulation while firmly defending the CFTC’s authority, even when it conflicts with state action.

The CFTC has already taken legal action against several states attempting to restrict or penalize event-based trading platforms as gambling. It also noted that Michigan is the first to directly intervene in completed transactions.

Selig warned that reversing executed trades would be unprecedented and could create broader market instability, undermining the certainty and trust that markets depend on.

In June, a Michigan circuit court ordered Kalshi to halt online sports-related contracts in the state, following a request from the attorney general.

On July 2, Kalshi filed an emergency request with the CFTC seeking guidance on how to respond to a court order requiring certain Michigan users’ trades to be voided, canceled, and refunded. The commission directed the firm not to comply, warning that allowing such reversals could erode market confidence by raising concerns that completed trades might later be undone.