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Michigan regulators have spent the past two months in direct legal combat with a prediction market operator – and Attorney General Dana Nessel’s signature on a new 44-state coalition letter to federal regulators is the latest escalation in that same fight, not a separate one.
The clash traces back to March, when Nessel sued Kalshi in Ingham County Circuit Court, arguing the company’s event contracts function as unlicensed Michigan sports betting without the same licensing the state requires of its regulated sports operators.
Judge Rosemarie Aquilina agreed, issuing a temporary restraining order in late June that barred Kalshi from offering, advertising, or accepting deposits for sports contracts from Michigan residents – with fines of $120,000 per day for noncompliance.
Michigan’s fight with Kalshi
The Michigan Gaming Control Board (MGCB) went a step further in early July, withdrawing entirely from the National Council on Problem Gambling over the nonprofit’s ties to Kalshi, with MGCB Executive Director Henry Williams describing the company’s offerings as sports wagering dressed up as investing.
The fight escalated again when the CFTC intervened directly. After Kalshi asked the agency for federal guidance on complying with the state court order, the CFTC directed Kalshi to keep Michigan’s sports trades intact anyway – setting up a direct standoff between a state court and a federal regulator over who actually holds jurisdiction.
What the coalition letter argues
That jurisdictional question is exactly what the new coalition letter puts to the CFTC.
Led by Ohio Attorney General Andy Wilson, the 44-state letter argues the agency’s proposed rule on prediction markets and event contracts would let federally regulated exchanges offer similar products nationwide while bypassing the same state licensing and consumer protections states have been fighting in court to enforce.
The rule, published June 12 in the Federal Register, would reverse a 15-year-old agency rule that barred gambling-related contracts from trading on CFTC-regulated markets.
Why it matters for Michigan
For Michigan, the stakes are concrete rather than theoretical: prediction markets typically allow wagering starting at age 18, compared to the 21-plus minimum the state enforces for its licensed operators. The coalition’s letter argues that gap – and the broader question of who gets to set rules for sports-outcome contracts – has always belonged to states, not federal commodities regulators.
The CFTC has not yet finalized its rule. Its five-member commission currently has only one sitting commissioner, which the coalition’s letter notes may complicate the agency’s ability to act on the proposal at all.
