Key Points
- Ingham County Circuit Court mandates Kalshi maintain restrictions on sports event contracts for Michigan residents during ongoing litigation.
- Court order mandates third-party geolocation services licensed by Michigan Gaming Control Board for enforcement.
- Daily penalties of $500,000 may apply for violations of geofencing requirements.
- State regulators classify Kalshi’s sports contracts as unlicensed wagering operations, while the company claims federal commodities jurisdiction.
- The Michigan case reflects broader nationwide tensions regarding prediction market regulation under state gambling statutes.
Ingham County Circuit Court Judge Rosemarie E. Aquilina issued a preliminary injunction on Sept. 1 requiring Kalshi to maintain blocks on sports event contracts for Michigan residents. This court directive supersedes the temporary restraining order from June and remains effective pending final adjudication.
State authorities contend that Kalshi operates sports wagering services without proper state authorization. Kalshi counters that its event contracts operate under federal commodities regulations and Commodity Futures Trading Commission supervision.
Court Mandates Rigorous Geofencing Standards
The preliminary injunction prohibits Kalshi from providing or processing sports contracts for Michigan-based users. Restricted offerings include moneyline markets, parlay combinations, over-under contracts, live in-game wagering and proposition betting. Kalshi must engage a third-party geolocation service holding valid licensing from the Michigan Gaming Control Board. This provider must comply with state-mandated geofencing specifications. Courts may impose $500,000 penalties for each day the company operates outside compliance parameters.
Attorney General Dana Nessel initiated legal proceedings in March with backing from the Michigan Gaming Control Board. The complaint alleges Kalshi permits Michigan residents to engage in sports wagering while characterizing the activity as event-contract commerce. Kalshi attempted jurisdictional transfer to federal court, but the U.S. District Court for the Western District of Michigan remanded the matter to state jurisdiction. Judge Aquilina subsequently granted the June restraining order, blocking sports contracts for Michigan users.
Jurisdictional Dispute Over Regulatory Authority Continues
This litigation represents one component of a nationwide debate regarding whether federal law preempts state gambling enforcement against prediction markets. Kalshi asserts the Commodity Exchange Act grants the CFTC exclusive jurisdiction over contracts on its federally registered platform.
Michigan and multiple states maintain that sports-focused contracts remain subject to local gambling statutes. Judicial outcomes vary by jurisdiction. Kalshi recently faced an unfavorable ruling in Nevada, while securing victory at the Third Circuit against New Jersey. Connecticut filed separate litigation against Kalshi in August concerning sports contracts. Additional legal challenges have surfaced in Kentucky, New York, Washington, Massachusetts and Baltimore.
Kalshi maintains market leadership in prediction market trading volume despite mounting legal challenges. The platform generated $38.67 billion in trading volume during August, exceeding the combined $8.41 billion from Polymarket and Polymarket US. The Sept. 1 order ensures Michigan’s sports contract prohibition remains active throughout the pending litigation.
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