A Michigan court has ordered prediction market operator Kalshi to keep its sports event contracts unavailable to customers in the state, with a potential fine of $500,000 (£369,000) for every day it breaches the ruling.
Ingham County Circuit Court Judge Rosemarie E. Aquilina signed a preliminary injunction on 1 September, according to the Michigan Attorney General’s Office. The order extends restrictions first imposed in June under a temporary restraining order.
Kalshi is prohibited from offering, listing, executing or settling sports-related contracts for people located in Michigan. The ban includes products that the state says are functionally similar to online sports betting, such as moneyline markets, parlays, over-under contracts, in-game betting and proposition bets.
The company must also use a third-party geolocation provider licensed by the Michigan Gaming Control Board. That provider must be capable of meeting the board’s geofencing requirements.
If the court finds that Kalshi has failed to comply, it can impose a $500,000 fine for each day of non-compliance. The injunction will remain in effect until the court issues a final order in the case.
Michigan Attorney General Dana Nessel filed the lawsuit against Kalshi in March, working with the Michigan Gaming Control Board. The state alleges that Kalshi breached the Michigan Lawful Sports Betting Act by offering sports event contracts without approval from Michigan authorities.
The complaint says Kalshi allows Michigan residents to participate in sports betting while describing the activity as trading in event contracts. Michigan argues that the products fall under the state’s gambling laws, despite Kalshi operating as a federally regulated derivatives exchange.
Nessel originally asked the court to declare Kalshi’s operation a common-law nuisance and to permanently prevent the company from offering or advertising the products in Michigan.
The dispute briefly moved to federal court after Kalshi sought to transfer the case to the U.S. District Court for the Western District of Michigan. That court accepted Michigan’s request to send the lawsuit back to Ingham County Circuit Court.
Aquilina issued the temporary restraining order in late June, stopping Kalshi from offering or facilitating sports event contracts in the state. That order included possible fines of $120,000 per day and required Kalshi to comply with Michigan’s geolocation rules.
The new preliminary injunction replaces that temporary order while the wider legal proceedings continue.
“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.
The case has also highlighted a wider conflict between state gambling regulations and federal oversight of derivatives markets.
After Michigan’s state court instructed Kalshi to stop its sports-related operations, the Commodity Futures Trading Commission directed the exchange to continue running its federally regulated market. The CFTC action came after Kalshi had started unwinding sports event positions held by Michigan users in an effort to meet the court’s requirements.
Kalshi told the federal regulator that Michigan’s order prevented it from continuing to accept trades from state residents. The company said complying with both instructions left it facing contradictory state and federal obligations.
Kalshi maintains that event contracts traded on its federally registered exchange are governed by the Commodity Exchange Act and fall under the exclusive authority of the CFTC. Michigan, however, says sports-related products can still be regulated under state gambling law when offered to customers within its borders.
Under Aquilina’s latest order, Kalshi must provide copies of the injunction within three business days to futures commission merchants (FCMs) that make sports contracts processed through the exchange available to customers.
The order also says Kalshi will not be liable for the conduct of an FCM’s customers where information about their locations is held by the intermediary and remains outside Kalshi’s control.
Michigan is one of more than a dozen states to challenge prediction market operators over sports contracts. Courts across the country have reached differing conclusions as they consider whether federal derivatives legislation prevents states from enforcing their gambling laws.
On 28 August, Kalshi lost an appeal in Nevada after the Ninth Circuit upheld the state’s authority to apply its gaming laws to the company’s sports contracts. The ruling rejected Kalshi’s attempt to stop Nevada from requiring state gaming approval.
New Jersey has taken the opposing position in a split among federal appeals courts and has asked the U.S. Supreme Court to review its case. The state filed a petition after the Third Circuit ruled that federal law prevented New Jersey from regulating Kalshi’s sports event contracts through its gambling system.
Connecticut opened another legal challenge on 26 August. Attorney General William Tong, Department of Consumer Protection Commissioner Bryan T. Cafferelli and Governor Ned Lamont sued Kalshi, seeking an injunction to prevent the company from offering sports contracts without a state sports wagering licence.
Connecticut regulators had previously ordered Kalshi, Robinhood and Crypto.com to stop offering or promoting sports event contracts in December 2025. Officials cited concerns over licensing, the state’s minimum age for sports betting and consumer protections required of approved operators.
Kalshi challenged that action in federal court, arguing that its contracts are controlled by federal commodities law. The CFTC later sued Connecticut and other states over attempts to regulate federally registered prediction markets, arguing that contracts listed on designated contract markets are covered by the Commodity Exchange Act and cannot be prohibited simply because their outcomes involve sporting events.
State authorities continue to pursue separate cases. Baltimore sued Kalshi and Polymarket in August over alleged unlicensed sports betting, while its Kalshi complaint also named Coinbase, Robinhood and Webull in relation to the distribution of sports event contracts.
Kentucky brought similar lawsuits against Kalshi and Polymarket in June, with additional cases and enforcement actions reported in New York, Washington, Massachusetts and other jurisdictions.
In Michigan, the 1 September preliminary injunction keeps the restrictions in place while Nessel’s lawsuit moves towards a final ruling.
