Michigan Judge Orders Kalshi to Halt Sports Event Contracts, Threatens $120K Daily Fines

A Michigan judge has ordered Kalshi to stop offering sports event contracts to users in the state, warning the prediction market platform it will be fined $120,000 for each day it continues to do so.’

Ingham County Circuit Judge Rosemary Aquilina granted state prosecutors’ request Monday for a temporary restraining order (TRO) against the company’s contracts, finding that “Michigan and its most vulnerable citizens are suffering … immediate and irreparable harm absent relief from being exploited by Kalshi’s sports betting operation masquerading as an investment opportunity.”

Sued by AG

Michigan Attorney General Dana Nessel sued Kalshi in March, alleging the contracts amounted to sports betting, which is licensed and regulated by the state. Kalshi argues the contracts are financial derivatives regulated by the federal Commodity Futures Trading Commission (CFTC) and that federal law preempts state regulation.

The TRO will remain in place pending the resolution of that case and will require Kalshi to use a Michigan-licensed third-party geolocation service provider to help it comply.

Kalshi said it would comply with the order but reiterated its position that it is regulated by the federal government, not Michigan. It also maintained that its event contracts do not constitute sports betting.

“It’s no surprise that we disagree with the state’s decision and will fight it in court,” said Elisabeth Diana, Kalshi head of communications. “We won’t be bullied by interests that care more about protecting their monopolies than their consumers. In the meantime, we’re implementing restrictions.”

Nessel welcomed the ruling: “We remain committed to enforcing a level playing field for all gambling platforms in Michigan and ensuring that companies cannot evade accountability or exploit consumers under the guise of a prediction market,” she said in a statement.

Kalshi-Skepticism

Kalshi’s lawyers earlier unsuccessfully attempted to move the case to a federal court, but US District Judge Paul Maloney determined federal rules about commodities trading do not supersede Michigan’s gambling laws.

In a separate federal case involving prediction markets, Maloney questioned whether sports event contracts qualify as financial derivatives, writing there was “no clear statement that Congress intended to supersede the states’ traditional role in regulating gambling.”

Aquilina’s ruling is the latest chapter in a wave of legal battles across the US over who should regulate sports contracts. The issue may one day be settled by the US Supreme Court.