Michigan Court Halts Kalshi’s Sports Contracts, Imposes $500,000 Daily Penalty

In summary

• Ingham County Circuit Judge Rosemarie Aquilina granted Michigan’s preliminary injunction against Kalshi, signed on Tuesday.
• Kalshi must verify user locations through a provider licensed by the Michigan Gaming Control Board or face a $500,000 fine for each day it fails to comply.
• The injunction applies to all advertising, account funding, and any product functionally equivalent to sports wagering, remaining in effect until a final judgment is reached.

A Michigan judge has ordered Kalshi to cease offering sports wagers to state residents and imposed a $500,000 penalty for every day the company fails to geofence users out of Michigan.

Ingham County Circuit Judge Rosemarie Aquilina determined that Michigan and its most vulnerable residents face immediate and irreparable harm from Kalshi’s “sports betting operation masquerading as an investment opportunity.”

The ruling noted that Michigan requires bettors to be at least 21 years old, whereas Kalshi permits participation at 18. Judge Aquilina also found that the exchange circumvents consumer protections embedded in Michigan’s regulatory framework, diverts funding from schools, compulsive gambling initiatives, and first responders, and deprives Tribal governments of revenue while disregarding their sovereignty.

Under the injunction, Kalshi is prohibited from accepting deposits from individuals located in Michigan, advertising through mobile applications, push notifications, influencers, affiliate networks, or paid placements, and from allowing account creation or funding by state residents. Products deemed “functionally similar” to sports betting—including parlays, moneyline wagers, in-game bets, and proposition bets—are also covered by the order.

Compliance requirements for Kalshi

Kalshi must implement compliance measures using a third-party geolocation provider licensed by the Michigan Gaming Control Board and capable of meeting the board’s geofencing specifications. Within three business days, Kalshi is required to forward the court order to every futures commission merchant that distributes its sports contracts, along with contact information for Michigan’s legal representatives. Kalshi will not be held liable for the subsequent actions of those firms.

Michigan Attorney General Dana Nessel filed suit in March under Michigan’s Lawful Sports Betting Act, contending that Kalshi enables residents to wager on sports events by framing them as trades on event contracts. Kalshi initially moved the case to federal court but lost, resulting in its return to Ingham County. A temporary restraining order was issued in June, and both parties submitted arguments at an August 17 hearing. Kalshi’s legal team includes Neal Katyal, a former acting U.S. solicitor general.

Nessel stated that the order safeguards residents from what she characterized as Kalshi’s “predatory, unlicensed practices.” Kalshi has encountered greater resistance in state courts than from its federal regulator: a Washington judge ordered the company to discontinue most markets in that state in August, shortly after the Commodity Futures Trading Commission invoked emergency authority to allow Kalshi to continue operating.

The CFTC has filed suit against nine states over the same regulatory question, beginning with Illinois, Arizona, and Connecticut, followed by Wisconsin, and then Minnesota within hours of that state’s ban taking effect. President Donald Trump has publicly criticized state officials who oppose prediction markets, labeling them “SCUM.”

The Michigan injunction remains in effect until a final judgment is issued in the case.

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