CFTC Orders Kalshi to Keep Michigan Sports Trades Open, Using 46-Year-Old Emergency Powers
Updated
Updated · CNN · Jul 17
CFTC Orders Kalshi to Keep Michigan Sports Trades Open, Using 46-Year-Old Emergency Powers
3 articles · Updated · CNN · Jul 17
Summary
A Tuesday CFTC order told Kalshi not to cancel pending Michigan sports contracts despite a state judge’s ruling, marking the agency’s most aggressive move yet against state regulation of prediction markets.
The commission invoked emergency powers unused since the Carter-era grain embargo, arguing that unwinding executed trades could disrupt market certainty and set a damaging precedent for fights in other states.
Kalshi said it had already complied with the Michigan order and unwound only a small volume of trades, leaving the immediate clash potentially moot even as the federal-state conflict deepens.
Michigan and 40 other states treat these markets as unlicensed gambling, while the CFTC under Trump has backed them as federally regulated event contracts and already sued states seeking to curb them.
Billions of dollars in weekly trading volume now hinge on the dispute, with Kalshi also blocked in Nevada, rebuffed in New York and many stakeholders expecting appeals courts or the Supreme Court to set a national rule.
Will the Supreme Court side with federal regulators or state authority in the battle over prediction markets?
With billions at stake, can regulators prevent insider trading on markets that predict the future?
When does a financial 'event contract' cross the line to become illegal gambling?
Federal vs. State Showdown: The CFTC’s 2026 Emergency Order, Michigan’s Lawsuit, and the Future of U.S. Prediction Markets
Overview
In July 2026, the Commodity Futures Trading Commission (CFTC) used its emergency powers to order Kalshi, a federally regulated prediction market, to keep all Michigan sports trades open and honor pending contracts. This move directly contradicted a Michigan state court order that required Kalshi to void and refund those trades, putting Kalshi in a difficult position as it had already started unwinding trades per the state’s directive. The CFTC’s intervention escalated the legal conflict between federal and state authorities, highlighting the growing tension over who has the final say in regulating prediction markets like Kalshi.