Kalshi says he is in an “impossible position” after the U.S. commodities regulator on Tuesday said it was blocking a forecast market platform from canceling trades in Michigan, contrary to a recent state court ruling.
June 29 Kalshi ordered by Ingham County Circuit Court Judge Rosemarie Aquilina to stop offering sports betting contracts to users pending the outcome of a lawsuit alleging Kalshi violated state sports betting laws. Commodity Futures Trading Commission ordered Kalshi on Tuesday failed to comply with the state’s order and continued operating.
“We are disappointed with this decision and believe it is unfair to Kalshi” – Robert DeNault, the company’s director of enforcement and general counsel he said in the declaration submitted in X.
“We have already taken action and resolved the transactions as ordered by the Michigan state court. We were placed in the impossible position of seeking to comply with state court orders that may conflict with our federal regulatory obligations. We had no choice.”
Source: Robert DeNault
The conflicting orders underscore the unresolved regulatory divide between the CFTC and the nearly two dozen state regulators over which the authorities have jurisdiction over prediction markets. The CFTC found that Michigan was the first state to attempt to interfere with ongoing derivatives transactions.
“Canceling transactions that have already been completed is an unprecedented step that risks a cascading effect across the market and undermines the contracting certainty that is an essential element of a functioning market,” Selig said.
“The Commission will not allow states or state courts to induce registered entities to violate the Commodity Exchange Act and CFTC regulations.”
A Kalshi spokesman said it was reviewing the CFTC’s order and considering next steps. According to to Reuters.
Related: OpenAI is quietly adding Kalshi World Cup odds to ChatGPT: Report
CFTC Chairman Michael Selig spoke on Fox Business on Friday he said It is “critical” that the regulator retains regulatory authority over prediction markets.
“We have already sued nine states and will continue to sue any state that attempts to impose criminal or civil penalties on CFTC-registered exchanges.”
Warehouse: The strategy became a symbol of the Internet crash: could history repeat itself?
