Update (Sept. 3, 9:20 pm UTC): This article has been updated to include a statement from Kalshi.

Michigan's attorney general has announced that a state court granted a preliminary injunction against Kalshi, blocking the prediction markets platform for state residents over what officials described as "sports betting [...] masquerading as an investment opportunity."

In a Wednesday notice, Attorney General Dana Nessel said the Circuit Court for the 30th Judicial Circuit in Ingham County approved an order barring Kalshi from offering event contracts to Michigan residents. The company faces fines of up to $500,000 per day for violations.

"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 (press release).

The Michigan court's action is the latest in a series of legal battles between prediction market companies such as Kalshi and Polymarket and US state authorities. At the heart of the dispute is a jurisdictional question that has grown more pressing as event-contract platforms have expanded aggressively into sports outcomes: Kalshi and its peers operate under federal derivatives regulation through the CFTC, while many states argue that sports-themed contracts amount to gambling that falls under their own licensing and consumer-protection laws. Nessel filed the lawsuit against Kalshi in March, alleging the platform violated state law on sports gambling — a claim that has appeared in many similar lawsuits across the country.

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The preliminary injunction follows a Michigan court's June temporary restraining order barring Kalshi from offering sports betting to residents. The US Commodity Futures Trading Commission (CFTC) ordered Kalshi not to comply with the state order and to continue operating — an action the company said put it in an "impossible position." That directive underscored the depth of the conflict: a federal regulator instructing a federally registered platform to disregard a state court order is an unusual posture, and it is precisely the kind of clash that legal observers say may ultimately require a higher court — or Congress — to resolve.

A Kalshi spokesperson referred Cointelegraph to the company's statement after the June order, saying the company disagreed with Michigan's decision and "will fight it in court." The spokesperson added that Kalshi was complying with restrictions imposed by the court.

New Jersey petitions US Supreme Court to weigh in on prediction markets

The Michigan state court order came the same day officials in New Jersey announced they had filed a petition for a writ of certiorari to the US Supreme Court over the state's case against Kalshi. If the justices hear the case, it could potentially resolve competing legal theories over whether the CFTC or state authorities hold jurisdiction over prediction markets. The outcome would carry significant weight for the broader industry: a ruling favoring federal jurisdiction could open the door to nationwide sports event contracts on CFTC-regulated platforms, while a ruling backing states could force platforms to navigate a patchwork of individual state gambling regimes.

"[I]t would be reasonable for the Supreme Court to take it up, but they also may wait for the cases to be decided on the merits and not simply procedural issues like granting a preliminary injunction or not," Melinda Roth, a visiting professor of practice at New England Law in Boston, told Cointelegraph. "Nevertheless, I still believe the Supreme Court will take this up, if not from New Jersey's cert petition, then soon, given the amount of ongoing litigation in this area."

Roth added:

"If and when SCOTUS takes it up, then this will likely decide whether sports event contracts are federally regulated by the CFTC or the states have the right to ban and/or regulate them as they see appropriate. I say 'likely' because Congress might actually act too. They could act before a SCOTUS review, or even after too."

Some US lawmakers have proposed legislation to address Kalshi and Polymarket customers using insider information on event contracts. In March, Senators Adam Schiff and John Curtis introduced a bill to prohibit platforms registered under the CFTC from listing any event contract that "resembles a sports bet or casino-style game," referring jurisdiction to individual states' authorities (press release). The coming months are likely to bring further rulings in the state-level cases, a decision on whether the Supreme Court grants New Jersey's petition, and possible movement in Congress — each of which could reshape how, and where, Americans can trade event contracts.

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