Michigan Extends Kalshi Sports Contract Ban, Gives Company Until Aug. 12 to Geofence State
A Michigan judge gave Kalshi 30 days to implement a geofencing technology before imposing $500,000 daily fines.
A Michigan judge has extended a temporary restraining order requiring Kalshi to stop offering sports-event contracts in the state and has given the prediction market until Aug. 12 to implement geofencing technology.
Judge Rosemarie Aquilina ruled Monday that the ban on Kalshi’s sports event contracts will remain in effect. At the same time, the company must deploy geolocation controls to prevent Michigan users from accessing them, according to InGame.
Under the order, Kalshi has until Aug. 12 to implement geofencing. If the company fails to comply without a court extension, it will face fines of $500,000 per day beginning Aug. 13. The extension follows Aquilina’s June 29 order temporarily barring Kalshi from offering sports-event contracts in Michigan. She required the company to implement geofencing measures or face daily fines of $120,000.
The court later granted Kalshi’s emergency request to pause the geofencing requirement while considering the company’s arguments that implementing the technology would be technically complex and potentially conflict with federal commodities regulations.
Currently, Kalshi blocks users based on their sign-up registration address.
Judge Rejects Kalshi’s Preemption Arguments
InGame reported that Aquilina appeared unconvinced by Kalshi’s preemption arguments during Monday’s hearing. She stated that the company was not dealing with commodities but with “gambling, which has traditionally been denied by the states.” She added, “What you’re doing is defining it in a way that works for you, but not for Michigan.”
Kalshi’s attorneys argued that Congress intended the Commodity Exchange Act to preempt state gambling laws when it created the modern federal framework for commodity derivatives markets.
The company also argued that implementing geofencing is a complex undertaking that requires extensive testing and coordination with geolocation provider GeoComply.
Kalshi told the court it is actively working with GeoComply, but couldn’t provide a timeline for completing the integration.
A GeoComply executive who testified at the hearing said geofencing implementations can generally be completed within 1 to 2 weeks, depending on the customer. However, much of the timeline depends on the customer’s technical preparations.
The state argued that Kalshi has a financial incentive to delay geofencing because of the substantial trading volumes generated during the FIFA World Cup.
Aquilina did not set an expiration date for the extended temporary restraining order. The parties are scheduled to return to court next Monday for a status update.
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