A Michigan judge has ordered prediction market operator Kalshi to remove all sports event-based contracts from the state, with penalties of up to $500,000 per day for noncompliance — a step that intensifies pressure on a company already facing legal challenges from more than a dozen states.

Ingham County Circuit Court Judge Rosemarie E. Aquilina signed the temporary restraining order on September 1, which Attorney General Dana Nessel addressed in a statement the following day. The order tightens restrictions on Kalshi that have been in place since June and remain in effect until the court rules on the case.

Nessel did not mince words. "Kalshi has long tried to masquerade as a legitimate gaming business within our state, and I'm relieved that this order helps keep Michigan residents safe from the firm's predatory, unlicensed activities," she said in her statement.

Michigan's lawsuit against Kalshi dates to March, when Nessel's office, working with the Michigan Gaming Control Board, charged the company with violating the state's Lawful Sports Betting Act. The case is part of a broader wave of state actions: regulators across the country have moved against Kalshi's sports contracts, arguing they constitute unlicensed sports betting under state gaming laws, even as the contracts trade on a federally registered exchange.

Kalshi faces $500,000 daily fine in Michigan

The scope of the order is extensive. Under Aquilina's ruling, Kalshi may no longer offer, post, execute, or settle any contract relating to sporting activities for any individual located in Michigan. This covers all traditional market types, including moneyline, parlay, over-under, in-game, and prop bets.

To enforce the geofencing requirement, the company must route users through a geolocation provider authorized by the Michigan Gaming Control Board. Failure to meet these requirements on any given day would trigger a $500,000 penalty for that day — a significant increase from the $120,000 per day fine set under the temporary restraining order issued in June.

The judge also ordered downstream actions. Within three working days, Kalshi must provide copies of the injunction to the futures commission merchants that route their customers' sports contracts to the exchange. Aquilina ruled that Kalshi is not responsible for an intermediary's customers when only the intermediary knows their location.

Kalshi fights Michigan over sports contracts

The Michigan lawsuit has already placed Kalshi in a difficult jurisdictional position. After the state moved to shut down its sports markets, the Commodity Futures Trading Commission ordered the exchange to keep its federally regulated market open — a directive that put the company in what it described as an "impossible position."

The conflict arose as Kalshi began unwinding Michigan users' sports positions in line with the state court's demands. According to the company, the state order blocked it from accepting trades from Michigan residents, making simultaneous compliance with both regulators impossible. Kalshi's core position is that its federally registered exchange handles contracts governed by the Commodity Exchange Act under the CFTC's jurisdiction. Michigan counters that offering a sports product constitutes gambling under state law. The dispute sits at the center of a longstanding tension in U.S. markets regulation, where federally designated trading venues have historically operated under a single national framework, while gambling regulation has traditionally been a state responsibility.

In an effort to escape Michigan's jurisdiction, Kalshi filed the matter in the U.S. District Court for the Western District of Michigan, but the court granted the state's request to remand the case back. A Kalshi spokesperson reiterated the company's earlier position that it disagrees with Michigan and "will fight it in court," while stating that Kalshi is complying with the court-imposed restrictions.

New Jersey asks the Supreme Court to settle it

Michigan's move came on the same day that New Jersey authorities filed a petition for a writ of certiorari asking the U.S. Supreme Court to review its case against Kalshi, Cointelegraph reported. A decision from the high court would resolve the central question underlying all these disputes: whether the CFTC or the states hold jurisdiction over prediction markets. Such a ruling would carry consequences well beyond Kalshi, as other CFTC-regulated prediction market operators offering sports and event contracts face similar state-level challenges.

Congress has also begun to act. In March, Senators Adam Schiff and John Curtis introduced a bill that would prohibit CFTC-registered platforms from listing any event contract resembling a sports bet or casino game, handing that oversight to the states.

Source: Cryptopolitan, Michigan AG press release