A Michigan state judge has ordered prediction market platform Kalshi to stop offering sports event-based contracts to people in Michigan, escalating a legal fight over whether those products fall under federal commodities law or state sports betting rules.
In a temporary restraining order signed on Sept. 1, Ingham County Circuit Court Judge Rosemarie E. Aquilina barred Kalshi from offering, posting, executing or settling the contracts in the state. The order carries penalties of up to $500,000 per day for noncompliance and remains in force while the case proceeds.
Court tightens existing restrictions
The new order strengthens limits that Michigan had already placed on Kalshi in June. Attorney General Dana Nessel referred to the ruling in a statement issued the next day, presenting it as a measure to protect residents while the state’s lawsuit moves forward.
Under the order, Kalshi must enforce geofencing in Michigan through an authorized geolocation provider. If the company fails to comply on any day, it faces a penalty of up to $500,000 for that day’s violation.
State says contracts amount to unlicensed sports betting
Michigan authorities, together with the Michigan Gaming Control Board, sued Kalshi in March. The state alleges the company violated Michigan’s Lawful Sports Betting Act by offering sports wagers in the form of event-contract trades without state approval.
Nessel described Kalshi as unlicensed and predatory. Michigan’s position is that even if the product is structured as a market contract, offering a sports-based product to state residents amounts to gambling activity governed by Michigan law.
Kalshi argues federal law should govern
Kalshi has maintained that the state orders place it in an impossible position. The company says its exchange is federally registered and that the contracts at issue should be regulated under the Commodity Exchange Act and by the US Commodity Futures Trading Commission rather than by individual state gambling authorities.
That argument goes to the center of the dispute: Kalshi treats the products as event contracts traded on a federally supervised platform, while Michigan views the same activity as sports betting offered without a state license.
Appeal underway as compliance obligations expand
The restraining order also requires Kalshi to notify downstream intermediaries, including futures commission merchants, within three working days by sending them copies of the injunction. That provision extends the practical effect of the order beyond Kalshi’s own website or app.
Kalshi is appealing the ruling and says it will continue to contest the case in court while complying with the restrictions now in place. The next confirmed step is further court review of Michigan’s lawsuit, with the temporary order remaining effective until the court issues a later decision.
Source: Cryptopolitan