What the Commission actually did
The document is titled Order Staying Emergency Rule Filed by KalshiEX LLC and Directing Kalshi to Fulfill Open Trades Involving Michigan Residents, captioned In the Matter of KalshiEX LLC's Notice Regarding Market Emergency Declaration and Emergency Rule Filing Pursuant to Commission Regulation 40.6(a). The two halves of that title are the two distinct acts, and they rest on different authorities: the stay on Commission Regulation 40.6(c)(1), the direction to fulfil on Section 8a(9) of the Commodity Exchange Act.
The Commission's jurisdictional predicate is stated at the top. Kalshi “obtained designation as a CFTC-regulated contract market on November 3, 2020,” event contracts are “swaps” as defined in the Act, and the Act confers “exclusive jurisdiction” on the Commission over swaps traded on designated contract markets. Everything downstream depends on that chain.
On the merits of the emergency, the order is direct about what it thinks was at stake: allowing the rule to take effect “would risk shattering public confidence by giving traders cause to worry that the trades they execute today may be unwound a week—or a year—later.” It frames the principle as general rather than specific to event contracts: “State courts cannot order the unwinding of executed swap transactions, whether it be a single contract or an entire class of trades,” because if they could, the same logic would reach “forward contracts, futures, and options, not just certain kinds of event contracts.”
It also explains why a stay alone was judged insufficient — the reasoning for the second, less usual half of the order: “Simply staying the Emergency Rule under Commission Regulation 40.6(c) will not necessarily remedy the emergency affecting the markets,” and “[t]he unprecedented forced liquidation of even one executed trade risks market distortions.” The Commission notes in the same passage that the limited size of the affected book — Kalshi had said it could “bear the cost of reimbursement” because “[t]he total number of positions impacted by the specific order is limited” — “does not obviate the market emergency.”
In the press release, Chairman Michael S. Selig put the same point in plainer terms: “A state cannot force a DCM to violate its obligations, and federal law does not permit a DCM to discriminate against a state's residents,” adding that “[c]anceling trades that have already been executed is an unprecedented step that risks a cascading effect on the entire marketplace” and that the Commission “will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations” (CFTC, press release 9267-26, 2026-07-14).
The sequence, dated
Sixteen days separate the state order from the federal one, and the intervening steps are what make this different from the other entries in this franchise. This is not two courts disagreeing — it is a state court reaching trades that had already been executed, the exchange moving to comply, and the federal regulator stopping the exchange from complying. Every entry below is quoted or paraphrased from the two CFTC documents:
“On June 29, 2026, the Circuit Court for Michigan's 30th Judicial District granted the State of Michigan's motion for a TRO against Kalshi.” The order prohibits Kalshi from facilitating anything constituting internet sports betting under MCL 432.403(s) for anyone located in Michigan, and requires a geolocation provider licensed by the Michigan Gaming Control Board meeting Technical Bulletin No. 2024-03.
Source: CFTC order
“After Kalshi filed a motion to dissolve or modify the TRO, the court issued a verbal modification requiring Kalshi to close out certain trades entered into by Kalshi traders located in Michigan. The court clarified in a July 6, 2026, correspondence to the parties that the trades must be ‘voided, cancelled and refunded.’” This is the step the Commission later calls unprecedented.
Source: CFTC order
The same day, Kalshi told the CFTC of “an imminent market emergency . . . that may necessitate emergency rules pursuant to [CEA] Section 5c(c), CFTC Regulation 40.6(a), and Kalshi Rule 2.8,” listing suspension of certain contracts for Michigan users, geolocation controls, “the potential need to address open contracts or positions held by persons located in Michigan,” and operational rule changes.
Source: CFTC order
Under the Emergency Rule, “[p]ositions of the identified Michigan-based users will be force-liquidated on the central limit orderbook at current market value as of the date of execution of this Emergency Rule.” Kalshi said that where liquidation value fell below a user's original cost of entry it “will pay the difference to the affected user from Kalshi's operational funds” and “will absorb the entire shortfall,” because “[t]he total number of positions impacted by the specific order is limited.”
Source: CFTC order
The Commission stays the Emergency Rule under Regulation 40.6(c)(1) and, under Section 8a(9) of the Commodity Exchange Act, “directs Kalshi to fulfill the trades in question in accordance with its normal practices.” Its stated reason for doing both rather than only staying: “Simply staying the Emergency Rule under Commission Regulation 40.6(c) will not necessarily remedy the emergency affecting the markets.”
The tags above record who acted, not who was right. For the two federal district orders that went opposite ways in the same week of July, see the Minnesota injunction and the Wisconsin ruling; for the durable state-by-state reference rather than any single dated action, see is Polymarket & Kalshi legal.