CFTC orders Kalshi to honor Michigan trades as state court quadruples fine to $500K daily
A Michigan judge extended Kalshi's sports event contract ban and raised the daily non-compliance penalty to $500,000. The court set an August 12 geofencing deadline for statewide location-based blocking of Michigan users. Separately, the CFTC ordered Kalshi to continue honoring trades placed by Michigan residents, creating a direct conflict with the state court order. The Michigan Gaming Control Board had previously moved to block Kalshi's sports wagers.
Kalshi now faces contradictory orders from federal and state authorities at the same time. The CFTC command to keep trading collides with the Michigan judge's August 12 geofencing deadline and $500,000 daily penalty. Kalshi must choose which regulator to defy. Complying with the CFTC risks $500,000 in daily fines.
Complying with the state court risks federal enforcement. This is the first time the CFTC has directly ordered a platform to ignore a state injunction. Other states are watching. A similar federal-state collision is already unfolding in Minnesota. The outcome will shape whether CFTC registration provides real cover or merely opens a second front.
Michigan's clash now joins a running federal-state collision that includes Minnesota's felony ban, New York's injunction denial, and parallel proceedings in Illinois, Kentucky, and New Mexico as state regulators test whether CFTC registration preempts their gambling laws.