A Michigan court has ordered Kalshi to keep sports event contracts unavailable in the state under a preliminary injunction that carries fines of $500,000 per day for violations.
Summary
- A Michigan court ordered Kalshi to continue blocking sports event contracts for residents under a preliminary injunction.
- Kalshi could face fines of $500,000 per day for violating the court’s geofencing requirements.
- Michigan sued Kalshi in March, alleging its sports contracts amounted to unlicensed sports betting.
- The injunction replaces a temporary restraining order issued in June and will remain until a final ruling.
- Kalshi faces similar legal challenges over sports contracts across multiple US states.
The Michigan Attorney General’s Office said Wednesday that Ingham County Circuit Court Judge Rosemarie E. Aquilina signed the order on Sept. 1, extending restrictions that have applied to the prediction market platform since a temporary restraining order was issued in June.
Under the injunction, Kalshi cannot offer, list, execute or settle sports-related contracts for people located in Michigan. The restrictions cover products functionally similar to internet sports betting, including 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 and capable of meeting the regulator’s geofencing requirements. The court set a $500,000 daily fine for any day it finds the company failed to comply with those requirements.
The injunction will remain in place until the court enters a final order in the case.
Michigan court keeps Kalshi sports contracts blocked
Michigan Attorney General Dana Nessel sued Kalshi in March on behalf of the state and in collaboration with the Michigan Gaming Control Board, alleging that the company violated the Michigan Lawful Sports Betting Act by offering sports event contracts without state approval.
The complaint argues that Kalshi enables residents to engage in sports betting while presenting the transactions as event-contract trading. Michigan has maintained that the products fall within its gambling laws even though Kalshi operates as a federally regulated derivatives exchange.
Nessel initially sought an order declaring the operation a common-law nuisance along with permanent injunctive relief preventing Kalshi from offering or advertising the products in Michigan.
The legal fight moved between state and federal court after Kalshi attempted to remove the lawsuit to the U.S. District Court for the Western District of Michigan. The federal court granted Michigan’s request to remand the case, returning it to Ingham County Circuit Court.
In late June, Aquilina granted a temporary restraining order that barred Kalshi from offering or facilitating sports event contracts in Michigan. As crypto.news previously reported, the original order imposed potential fines of $120,000 per day for noncompliance and required the company to meet state geolocation rules.
The new preliminary injunction replaces the temporary order while the underlying lawsuit continues.
“Kalshi long attempted to pass itself off as a legitimate gaming operation in our state, and I am relieved that this order further protects Michigan residents from its predatory, unlicensed practices,” Nessel said.
Kalshi has faced conflicting Michigan orders
The Michigan case previously created a separate dispute between state restrictions and federal derivatives oversight.
After the state court ordered Kalshi to stop its Michigan sports operations, the Commodity Futures Trading Commission directed the exchange to continue operating its federally regulated market.
The CFTC order involving Michigan came after Kalshi had begun unwinding sports event positions held by users in the state to comply with the court restrictions.
Kalshi told the federal regulator that the Michigan order prevented it from continuing to accept trades from state residents. The company argued that following both directives placed it between conflicting state and federal requirements.
The disagreement stems from Kalshi’s position that event contracts traded on its federally registered exchange fall under the Commodity Exchange Act and the CFTC’s exclusive jurisdiction. Michigan contends that sports-related products can still be regulated under its gambling laws when offered to people inside the state.
Aquilina’s latest order requires Kalshi to provide copies of the injunction within three business days to futures commission merchants that make sports contracts processed through its exchange available to their customers.
The order states that Kalshi will not be held responsible for an FCM’s customers when information about their locations remains in the possession of the intermediary and outside Kalshi’s control.
State fights over Kalshi sports markets continue
Michigan is one of more than a dozen states where regulators, attorneys general or other authorities have challenged prediction markets over sports contracts.
The disputes have produced different results as courts consider whether federal derivatives law prevents states from applying their gambling rules.
On Aug. 28, Kalshi lost its Nevada appeal after the Ninth Circuit upheld the state’s ability to apply gaming laws to its sports contracts. The ruling rejected Kalshi’s attempt to prevent Nevada from requiring state gaming approval.
New Jersey has taken the opposite side of a split in the federal appeals courts to the U.S. Supreme Court. The state filed a petition seeking review after the Third Circuit found that federal law prevented New Jersey from regulating Kalshi’s sports event contracts under its gambling regime.
Elsewhere, Connecticut opened another state-level front last week.
Connecticut Attorney General William Tong, Department of Consumer Protection Commissioner Bryan T. Cafferelli and Gov. Ned Lamont sued Kalshi over sports contracts on Aug. 26, seeking an injunction to stop the company from offering the products without a state sports wagering license.
Connecticut regulators had previously ordered Kalshi, Robinhood and Crypto.com to stop offering or promoting sports event contracts in December 2025. State officials raised concerns involving licensing, the state’s minimum sports betting age and consumer protections required of approved operators.
Kalshi challenged that enforcement action in federal court, maintaining that its contracts are governed by federal commodities law.
The CFTC later joined the jurisdictional fight by suing Connecticut and other states over attempts to regulate federally registered prediction markets. The regulator has argued that contracts listed on designated contract markets fall under the Commodity Exchange Act and cannot be prohibited by states simply because their outcomes involve sporting events.
State authorities have continued pursuing their own cases. Baltimore sued Kalshi and Polymarket in August over alleged unlicensed sports betting, with its Kalshi complaint naming Coinbase, Robinhood and Webull over their distribution of sports event contracts.
Kentucky filed similar lawsuits in June against Kalshi and Polymarket, while cases and enforcement actions have reached New York, Washington, Massachusetts and other jurisdictions.
In Michigan, the Sept. 1 injunction leaves the restrictions in place while Nessel’s March lawsuit proceeds toward a final ruling.