CFTC and Michigan Clash Over Kalshi Prediction Market Jurisdiction

The dispute centers on whether Kalshi’s event contracts constitute federally regulated derivatives or unlicensed state-level gambling. While Ingham County Circuit Court Judge Rosemarie Aquilina previously ordered the platform to cease sports betting operations or face daily fines of $120,000, the CFTC maintains that such state interference threatens the integrity of its federal regulatory framework. CFTC Chair Michael Selig warned that forcing the cancellation of executed trades creates dangerous uncertainty for financial markets, vowing to defend the agency’s exclusive authority against state-level intervention.

Robert DeNault, Kalshi’s head of legal and enforcement, described the company as being in an impossible position. Having already moved to reverse trades to satisfy the Michigan court, the firm now faces potential federal repercussions for following state mandates. This Michigan standoff is part of a broader national conflict; similar legal challenges are currently playing out in Massachusetts and New York, where state authorities are aggressively asserting that local gaming laws take precedence over the federal Commodity Exchange Act. With the CFTC already pursuing litigation against nine states, the case underscores the intensifying struggle for control over the rapidly evolving prediction market sector.