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An Ingham County judge has told Kalshi to stay out of Michigan’s online sports betting market for the second time in three months. This time, the price of ignoring her got a lot steeper.
And Michigan is just one front in a fight that now spans more than a dozen states.
Circuit Judge Rosemarie E. Aquilina granted a preliminary injunction against KalshiEx LLC on Tuesday, Michigan Attorney General Dana Nessel announced Wednesday. The order requires Kalshi to keep using geofencing technology, run through a provider licensed by the Michigan Gaming Control Board (MGCB), and block anyone physically located in Michigan from accessing its sports event contracts.
Miss that requirement and Kalshi owes the state $500,000 a day.
That’s more than four times the $120,000 daily figure attached to the temporary restraining order Aquilina signed back on June 29, when this fight first landed in her courtroom.
Why Michigan calls Kalshi’s contracts illegal online sports betting
Nessel sued Kalshi in March, arguing the prediction market’s sports contracts are sports bets by another name. Her office says Kalshi let Michigan users wager on game outcomes through what it called event contracts, without ever seeking a license from the MGCB, approval every legal Michigan sportsbook must have.
Nessel said:
“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. My office will continue to defend Michiganders and enforce our gaming laws, which ensure gambling revenue is regulated and distributed back into our communities.”
Kalshi tried to get the case out of Aquilina’s courtroom entirely, moving it to federal court not long after Nessel filed suit. Nessel asked for its return to state court. The motion to remand was granted, and the case returned to Ingham County Circuit Court, where it has stayed since.
A circuit split that’s heading for the Supreme Court
Michigan’s order landed five days after the biggest development yet in the states vs. prediction markets battles. The 9th U.S. Circuit Court of Appeals ruled Aug. 28 that Nevada can regulate Kalshi’s sports contracts as gambling, rejecting the company’s argument that federal registration as a commodities exchange shields it from state law.
Judge Ryan Nelson wrote for the unanimous panel that “the substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps.”
That directly contradicts the 3rd Circuit, which ruled the opposite way on April 6 in KalshiEX LLC v. Flaherty. That 2-1 decision found the Commodity Exchange Act pre-empts state gambling law for contracts traded on a federally registered exchange, and blocked New Jersey from enforcing its own gambling statute against Kalshi.
Two federal appeals courts, two opposite answers to the same question. Lawyers on both sides now expect the US Supreme Court to be the one that settles it.
The Commodity Futures Trading Commission (CFTC) has taken Kalshi’s side aggressively in the meantime. The agency has sued nine states directly – including Illinois, Connecticut, New Mexico, Rhode Island, and Wisconsin – to block their enforcement actions before they can reach Kalshi.
When New York sued Kalshi on July 31 seeking more than $36 billion in damages and a permanent shutdown, the CFTC responded on Aug. 11 by invoking emergency authority to order Kalshi to keep operating in the state anyway.
CFTC Chair Michael Selig said:
“Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws.”
New York Attorney General Letitia James isn’t backing off that framing.
“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.”
Her lawsuit also alleges Kalshi let users as young as 18 access sports contracts, below the 21-and-over minimum New York sets for mobile sports betting.
Anyone who plays and feels it’s becoming a problem, regardless of what the platform calls itself, can call 1-800-GAMBLER.
Kalshi’s other fronts, state by state
Michigan and New York are two pieces of a fight playing out in courtrooms across the country, and the results are going both ways.
Massachusetts secured its own preliminary injunction in January, barring Kalshi’s sports, election, and entertainment contracts entirely. Ohio’s Casino Control Commission moved to fine Kalshi $5 million, and the 6th Circuit denied Kalshi’s bid to block that enforcement in April. In Montana, Kalshi sued the state after a second cease-and-desist order, rather than wait to get sued itself.
Wisconsin and Kentucky both went after the whole industry at once, suing Kalshi alongside Coinbase, Polymarket, Robinhood, and Crypto.com, with Kentucky adding Webull to the list. The CFTC countersued both states within days.
Four New Mexico tribes, including the Mescalero Apache Tribe, sued Kalshi in May over tribal gaming sovereignty, arguing the company owes tribal nations the same deference it owes state regulators. Kalshi is fighting to get that case dismissed. Two California tribes are waiting on a 9th Circuit ruling of their own, after a third dropped its claim in August without explanation.
Arizona, Connecticut, Illinois, Minnesota, Rhode Island, Tennessee, Utah, and Washington all have Kalshi litigation of their own moving right now, most of it tangled up in the same federal-versus-state argument playing out in Michigan.
American Gaming Association CEO Bill Miller, whose members are the licensed operators competing against Kalshi in every one of these states, praised the 9th Circuit’s Nevada ruling as a win for “state and voter choices about sports betting in their communities.”
The fine just went up again in Michigan. Whether that finally changes Kalshi’s math is one small piece of a fight that’s now headed for the Supreme Court to decide for everyone.
