The U.S. Commodity Futures Trading Commission threw itself between Michigan courts and prediction market company Kalshi on Tuesday, issuing an order barring the company from responding to a local court’s request to void previous customer trades.
The CFTC’s decision amplifies its legal fight with state governments and courts over what its chairman considers its unbreakable and exclusive regulatory authority over exchanges in Kalshi, which it regulates as a Designated Contract Market (DCM).
“The commission will not permit states or state courts to intimidate 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 embraced predictive markets and promised to introduce favorable regulations. He also vigorously defended his agency’s authority to regulate them in a way that negates the powers of the state.
The CFTC has sued a number of states that sought to stop or penalize event contracting activities as illegal gambling. The agency noted Tuesday that Michigan is the first state to attempt to directly interfere in transaction activity.
