Michigan Extends Kalshi Sports Contract Ban, Sets $500K Daily Penalty
Kalshi must remain geofenced in Michigan through the end of the case, with the court citing harm to youth, problem gambling, state revenue and tribal interests.
A Michigan judge has granted a preliminary injunction blocking Kalshi from offering sports event contracts in the state, finding that its operations threaten state gaming revenue, consumer protections and tribal interests.
In the Sept. 1 order, Ingham County Circuit Court Judge Rosemarie Aquilina extended restrictions she first imposed in June, when she granted Michigan Attorney General Dana Nessel’s request for a temporary restraining order against Kalshi.
The injunction prohibits Kalshi from offering sports event contracts in Michigan. It also bans other activities such as advertising, marketing or soliciting contracts in the state. It also requires the exchange to use a third-party geolocation provider licensed by the Michigan Gaming Control Board to block access from within the state.
If Kalshi fails to comply with the geolocation requirements, it faces a $500,000 daily fine.
The injunction will remain in effect until the issuance of a final order in the case.
“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.
Kalshi must also provide the injunction within three business days to every futures commission merchant (FCM) offering its sports contracts to customers. However, it will not be liable for an FCM’s subsequent conduct because it does not control which customers those firms serve or possess their location information.
Judge Points to Age Limits, Gaming Revenue and Tribal Interests
In granting the injunction, Aquilina found that Michigan and its residents would suffer “immediate and irreparable harm” without relief. She described Kalshi as a “sports betting operation masquerading as an investment opportunity.”
Among the court’s findings, Aquilina highlighted the difference between Michigan’s minimum sports betting age of 21 and Kalshi’s policy of allowing people to place wagers beginning at age 18.
If Kalshi is allowed to continue to offer sports wagers, the potential irreparable harm on Michigan’s youth would be profound,” the judge wrote.
The order also states that Kalshi “takes advantage of serious mental health issues.” Additionally, the exchange operates without the patron protections imposed by Michigan’s regulated gaming framework. Aquilina also found that by failing to comply with Michigan’s regulatory framework, Kalshi gains an unfair competitive advantage over companies that comply with state gaming laws.
The order further focused on the financial effects of activity occurring outside Michigan’s regulated gambling market. Aquilina found that Kalshi is undercutting funding for schools, compulsive gambling prevention, economic development and first responders. She also pointed to gaming tax revenue that Detroit uses for law enforcement, public safety, youth programs and infrastructure.
The judge separately addressed tribal gaming interests. She found that Kalshi’s conduct “negatively impacts Tribes by depriving them of the revenue they need to operate their governments and serve their citizens, while also ignoring their sovereignty.”
Michigan Adds to State-Level Kalshi Injunctions
Nessel sued Kalshi in March. The complaint alleged that the exchange’s sports-event contracts constitute unlicensed sports betting under the state’s Lawful Sports Betting Act. Kalshi removed the case to federal court, but it was subsequently remanded to Ingham County Circuit Court.
The dispute was further complicated after the Commodity Futures Trading Commission directed the exchange to continue processing trades involving Michigan customers.
Michigan is not alone in securing a preliminary injunction against Kalshi. A Nevada state court has similarly barred the company from offering sports event contracts without state gaming approval. Additionally, a Washington judge granted a preliminary injunction in July. That has led Kalshi to implement geofencing for sports, elections and several other categories of event contracts.
The Michigan order also comes days after the Ninth Circuit upheld the dissolution of a separate federal injunction that had protected Kalshi from Nevada gaming enforcement. The appellate court found that Kalshi had not shown that federal commodities law preempts Nevada’s regulation of its sports contracts.
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