The U.S. Commodity Futures Trading Commission on Tuesday stepped between Michigan courts and prediction trading firm Kalshi, issuing an order to block the company from complying with a local court’s demand that it cancel previous customer transactions.
The CFTC’s move amplifies its legal fight with state governments and courts over what its chairman says is its unbreakable and exclusive regulatory authority over trading on Kalshi, which it regulates as a designated contracts market (DCM).
“The commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations,” CFTC Chairman Mike Selig said in a statement accompanying his agency’s order. Selig has embraced prediction markets and promised to institute friendly regulations, and he has also vigorously defended his agency’s authority to regulate them in a way that denies state powers.
The CFTC has sued several states that have tried to stop or penalize event contract businesses such as illegal gambling. The agency noted Tuesday that Michigan is the first state to attempt to directly interfere with trading activity.
