CFTC Blocks Kalshi From Cancelling Michigan Sports Trades Ordered Voided

The Commodity Futures Trading Commission has stopped Kalshi from liquidating sports event contracts that a Michigan court ordered cancelled and refunded. The intervention leaves Michigan’s restriction on new sports trades intact while opening a direct federal-state confrontation over who controls transactions already executed on a regulated derivatives exchange.

Kalshi filed the emergency rule July 12 after an Ingham County Circuit Court verbally ordered it to close certain positions. The court clarified in July 6 correspondence that the trades had to be “voided, cancelled and refunded,” according to the CFTC order. Kalshi proposed selling the positions on its central order book at current market value and covering any shortfall between the sale price and each user’s original cost from its own funds.

The CFTC’s action does not expressly reopen Kalshi’s sports markets to Michigan users. Instead, it targets the narrower instruction to unwind positions that had already been executed, drawing a line between preventing new transactions and cancelling existing ones.

The commission found that allowing Kalshi’s emergency rule to take effect could constitute a major market disturbance by weakening confidence that completed derivatives transactions will be honored. It said even a limited number of forced liquidations could distort prices in related contracts and introduce uncertainty across futures, options and other federally regulated products.

Michigan’s original order rests on a competing view of the same products. Aquilina cited the state’s minimum betting age, responsible-gaming protections, taxation system and licensed sportsbook framework in finding that continued access could cause irreparable harm. The Michigan Gaming Control Board has characterized Kalshi’s contracts as sports betting presented as investment products, while Kalshi and the CFTC describe them as swaps subject to exclusive federal oversight.