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Federal regulator tells Kalshi to defy Michigan state court with settlements of sports event contracts

Legal Writer

Publish Date: Jul 16, 2026

Fact checked by: Matt Moreno

Key Points

A Michigan county circuit court judge ordered Kalshi to void and refund trades of sports event contracts initiated by people in the state
Kalshi employee says that the company has already complied with that court order
The CFTC responded by ordering Kalshi to settle the contracts following normal procedures

Kalshi has communicated its displeasure with the federal agency responsible for regulating its activities after the United States Commodity Futures Trading Commission demanded that the company reverse course in terms of compliance with an order from a judge in Michigan. Because of that action, Kalshi Head of Enforcement Robert DeNault says that the company is “in an impossible position” of not being able to comply with both the CFTC’s order and the Michigan court order because the two demands are inherently contradictory.

It could be weeks if not months before Kalshi gets lasting and significant clarity on the situation as well.

Photographer: Gabby Jones/Bloomberg via Getty Images

Kalshi lead counsel comments on CFTC’s emergency authority

On Wednesday, DeNault took to X to share his opinion on the Commodity Futures Trading Commission’s (CFTC) use of emergency authority in the situation between Kalshi and Michigan authorities.

“We are disappointed by this decision and believe it is unfair to Kalshi,” DeNault stated. “We already acted and unwound the trades, as the Michigan court order required us to do. We are being put in an impossible position, looking to follow state court orders that may contradict our federal regulatory obligations. We did not have a choice.”

The decision that DeNault refers to is a Tuesday announcement from the CFTC demanding Kalshi ignore the court order in question. Kalshi had informed the CFTC of its compliance with the order on Sunday by filing an emergency rule that it believed would put the company into compliance with the order.

Michigan judge and CFTC remand contradictory guidance

Ingham County Circuit Court Judge Rosemarie Aquilina handed down that order on June 29. Among other things, the order required Kalshi to cancel, refund, and void sports event contracts initiated by people in Michigan that had not yet settled.

However, the CFTC emergency action demanded that Kalshi “fulfill the open trades in accordance with its normal practices.” The result is what DeNault described as the impossible situation in which Kalshi has to choose which authority to defy regarding its handling of open sports event contracts traded by people in Michigan.

Kalshi has several legal options at this juncture, but few of them are particularly desirable or capable of resolving the situation quickly.

Paths forward on sports contracts for Kalshi in Michigan

Kalshi is already involved in the dispute before the Ingham County Circuit Court, and has recourse there to seek a reversal or stay of Aquilina’s court order. Kalshi has already exercised the first of those options, making a lengthier appeal the logical next step.

There are means to expedite reviews in Michigan’s state court system, but there is no guarantee that Kalshi’s situation would trigger that expedited process. Even on an expedited basis, obtaining a reversal or stay of the order would probably take weeks at least.

Kalshi could also approach the issue from the other side, meaning that it could seek relief from the need to comply with the CFTC’s emergency order in this case. However, taking legal action against the regulatory body that has been a strong ally to Kalshi in disputes with state governments is probably undesirable for Kalshi.

Additionally, the CFTC’s order represents the situation that Kalshi likely prefers over the alternative. Being unable to process sports event contract trades in Michigan represents a restriction of Kalshi’s business prospects.

Kalshi could also seek protection from Aquilinia’s order from a federal district court in Michigan, but that might take even longer than going the state court route. Kalshi has not had success in seeking similar protection from Michigan authorities in the past going that route as well.

For the time being, Kalshi faces a situation where every course of action is undesirable for some reason.

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