CFTC Suspends Kalshi Emergency Rule, Blocks Forced Liquidation of Michigan Users' Sports Event Contracts

The U.S. Commodity Futures Trading Commission (CFTC) suspended an emergency rule filed by derivatives platform Kalshi on Tuesday, blocking the forced liquidation of sports event contract positions held by Michigan residents and requiring Kalshi to follow normal procedures. Kalshi submitted the emergency rule on July 12 after an Ingham County Circuit Court in Michigan verbally ordered the platform to close certain positions and demanded cancellation and refunds via letter on July 6.

The dispute stems from litigation filed in March by Michigan's Attorney General Dana Nessel and the state's gaming regulator, who argue Kalshi's sports event contracts constitute unlicensed internet gambling. The CFTC stated that allowing the emergency rule could undermine confidence in derivative contract settlement and cause market disruption, asserting states cannot compel designated contract markets to violate federal obligations.