Better Markets Accuses CFTC of Directing Kalshi to Defy Michigan Court Order on Sports Event Contracts

The non-profit advocacy group Better Markets has sharply criticized the Commodity Futures Trading Commission (CFTC) for intervening in a Michigan state court ruling against Kalshi, the regulated event-contracts exchange. Benjamin Schiffrin, Better Markets' Director of Securities Policy, alleged that the CFTC is overstepping its authority by ordering Kalshi to disregard a lawful court order that required the platform to void and refund bets on sporting events made by Michigan residents.

The Michigan Court Order and CFTC Intervention

In a ruling that Better Markets described as necessary to prevent Michigan's most vulnerable citizens from being exploited by what the court called Kalshi's "sports betting operation masquerading as an investment opportunity," a Michigan state court ordered Kalshi to close out certain event contracts on sporting events, void the bets, and issue refunds. Kalshi subsequently filed a rule change with the CFTC to comply with that order, including reimbursing users so that no trader lost money. However, the CFTC stayed that rule change and instead directed Kalshi to proceed with executing the bets, effectively defying the state court. The CFTC stated it would "not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations," and noted its history of supporting Kalshi in litigation against states that view the platform's products as illegal sports betting.

Better Markets' Criticism of the CFTC's Rationale

Schiffrin questioned why the CFTC now views a court that rules in favor of a state and against Kalshi as "bullying," and challenged the agency's legal authority to order a registered entity to violate a court order. Schiffrin pointed out what he called a glaring inconsistency in the CFTC's actions: in March 2026, the CFTC permitted Kalshi to void bets and reimburse users for an event contract on whether Ayatollah Ali Khamenei would be "out" by April 1, following public and trader backlash over the so-called "death market." Now, the CFTC claims that similarly reimbursing Michigan users in compliance with a court order would create a "market emergency," even though Kalshi has stated the number of affected bets is limited. "The CFTC has proven over and over and over in the last year that it will do anything that favors Kalshi," Schiffrin said. "It appears that now includes ordering Kalshi to defy an order of a court."

Broader Implications for State vs. Federal Authority

The dispute highlights a growing tension between state efforts to regulate event-contract platforms as gambling and the CFTC's federal oversight. The CFTC has previously sued some states that have attempted to block Kalshi's offerings, but its latest move—ordering non-compliance with a specific court order—represents a significant escalation. Better Markets, founded after the 2008 financial crisis to advocate for financial reform, contends that the CFTC's actions are lawless and undermine the rule of law.