Michigan Bars Kalshi Sports Contracts, $500,000 Daily Fine

On Sept. 1 a Michigan judge issued a preliminary injunction barring Kalshi from offering or facilitating sports event contracts to anyone located in Michigan and set a $500,000 daily penalty for failing to meet the court’s geofencing requirements.

The order prevents Kalshi and parties acting with it from providing covered internet sports-betting contracts to Michigan residents. The restriction covers deposits, advertising and solicitation, account access and products that function like sports betting. The injunction remains in place until the court issues a final order in the case.

The ruling requires Kalshi to use a third-party geolocation provider licensed by the Michigan Gaming Control Board and able to meet the regulator’s geofencing specifications. If the court later finds Kalshi did not comply with that geolocation requirement, the company would owe $500,000 for each day of noncompliance.

The injunction also reaches intermediaries that could enable Michigan customers to access Kalshi’s exchange. Within three business days of the order, Kalshi must provide every futures commission merchant that offers the sports event contracts with a copy of the order and contact information for Michigan’s counsel. The order does not make Kalshi responsible for a futures commission merchant’s later actions or failures after receiving notice.

The preliminary injunction follows a temporary restraining order issued in June that had an initial 14-day term and a stated $120,000 daily penalty for noncompliance. The current order raises the geolocation-specific penalty and keeps an open-ended compliance regime pending final resolution. At this preliminary stage, the judge found Michigan and its residents would face immediate and irreparable harm without relief; the court did not resolve the underlying allegations.

The case involves whether Kalshi’s sports event contracts fall under federal law or state gambling statutes. Kalshi classifies the contracts as federally regulated event contracts overseen by the Commodity Futures Trading Commission. Michigan treats the covered sports products as internet sports betting subject to state licensing. The CFTC has asserted jurisdiction over prediction markets offered on designated contract markets.

Federal appellate courts are divided on the preemption question. In April the Third Circuit preserved preliminary protection for Kalshi in a New Jersey matter, while on Aug. 28 the Ninth Circuit in a Nevada case concluded Kalshi had not shown federal preemption. The Michigan order applies only within the state and does not resolve the nationwide split.

Kalshi has not issued a public comment on the Michigan order. The case will continue toward a final decision that could clarify whether federally registered prediction markets are exempt from state-level gambling enforcement when they offer sports-related contracts.