TLDR
- A Michigan court ordered Kalshi to keep sports-related event contracts blocked for residents while the state lawsuit continues.
- The preliminary injunction requires Kalshi to use a Michigan-licensed third-party geolocation provider to enforce the restrictions.
- Kalshi could face a $500,000 daily fine if the court finds that it failed to meet the required geofencing rules.
- Michigan argues that Kalshi’s sports contracts operate like unlicensed sports betting, while Kalshi says federal commodities law governs its markets.
- The Michigan dispute adds to a growing legal split across U.S. states over whether prediction market sports contracts fall under state gambling laws.
A Michigan court ordered Kalshi to keep sports event contracts blocked for state residents while a lawsuit continues. Ingham County Circuit Court Judge Rosemarie E. Aquilina signed the preliminary injunction on Sept. 1. The order replaces a June temporary restraining order and will remain active until the court reaches a decision.
Michigan officials argue that Kalshi offers products that function like sports betting without a state license. The company maintains that its event contracts fall under federal commodities law and Commodity Futures Trading Commission oversight.
Kalshi Faces Strict Geolocation Rules
The injunction bars Kalshi from offering or settling sports contracts for Michigan users. The restrictions cover moneyline markets, parlays, over-under contracts, in-game betting and proposition bets. Kalshi must use a third-party geolocation provider licensed by the Michigan Gaming Control Board. The provider must meet state geofencing standards. The court set a penalty of $500,000 for each day Kalshi fails to follow those requirements.
Michigan Attorney General Dana Nessel filed the lawsuit in March with support from the Michigan Gaming Control Board. The complaint says Kalshi allows residents to place sports wagers while presenting the activity as event-contract trading. Kalshi tried to move the case to federal court, but the U.S. District Court for the Western District of Michigan returned it to state court. Aquilina then issued the June restraining order, which kept the company’s sports contracts unavailable in Michigan.
Federal and State Rules Remain in Conflict
The case sits within a broader dispute over whether federal law blocks states from applying gambling rules to prediction markets. Kalshi says the Commodity Exchange Act gives the CFTC authority over contracts traded on its federally registered exchange.
Michigan and several other states argue that sports-related contracts can still fall under local betting laws. Courts have reached different conclusions. Kalshi recently lost an appeal in Nevada, while the Third Circuit ruled in its favor against New Jersey. Connecticut also sued Kalshi in August over sports contracts. Other legal actions have emerged in Kentucky, New York, Washington, Massachusetts and Baltimore.
Despite the legal pressure, Kalshi remains the largest prediction market by trading volume. The platform recorded $38.67 billion in August, compared with $8.41 billion combined for Polymarket and Polymarket US. In Michigan, the Sept. 1 order keeps the sports contract block in place as the state lawsuit moves toward a final ruling.
