Michigan Judge Bars Kalshi Sports Bets, Threatens $500,000 Daily Fine
Key Takeaways
- •Judge Rosemarie Aquilina granted Michigan a preliminary injunction requiring Kalshi to stop offering sports wagers in the state, backed by a $500,000 daily fine for noncompliance with geofencing requirements.
- •The injunction prohibits Kalshi from accepting Michigan deposits, advertising through apps and influencers, and enabling account creation, covering products functionally similar to sports betting such as parlays and proposition bets.
- •The court found Kalshi undermines Michigan's regulatory framework by accepting 18-year-old bettors, bypassing patron protections, and reducing revenue that supports schools, gambling prevention programs, first responders, and tribes.
- •Michigan Attorney General Dana Nessel sued Kalshi in March under the Lawful Sports Betting Act, with the case returning to state court after Kalshi's failed attempt to move it to federal court.
- •The ruling is part of a wider conflict between states and the CFTC over whether prediction-market sports contracts fall under federal commodities law or state gaming regulations, with the outcome potentially decided on appeal.
A Michigan judge has ordered prediction market operator Kalshi to stop offering sports wagers in the state, and to pay $500,000 for every day it fails to geofence Michigan residents, under an order signed Tuesday.
Ingham County Circuit Judge Rosemarie Aquilina granted the state a preliminary injunction, writing that Michigan and its most vulnerable residents face immediate and irreparable harm from Kalshi's "sports betting operation masquerading as an investment opportunity."
Michigan Attorney General Dana Nessel announced the ruling on X:
@miattygen Dana Nessel has secured a preliminary injunction against KalshiEx, LLC (Kalshi), halting the prediction market company from unlawfully offering online sports wagers in Michigan. Read more at pic.twitter.com/oBd3vOUFXN — Michigan Attorney General Dana Nessel (@MIAttyGen) September 2, 2026
The order notes that Michigan requires bettors to be 21, while Kalshi accepts them at 18. Aquilina also found that the exchange sidesteps the patron protections built into Michigan's regulatory framework, undercuts funding for schools, compulsive gambling prevention programs and first responders, and deprives Tribes of revenue while ignoring their sovereignty. The latter point reflects the structure of Michigan's legal betting market, where twelve federally recognized tribes operate casinos under compacts with the state and share gaming revenue that supports local services — revenue streams that legal online operators also contribute to through taxes and licensing fees.
Scope of the injunction
The injunction bars Kalshi from accepting deposits from anyone in Michigan, from advertising through apps, push notifications, influencers, affiliates or paid placements, and from allowing account creation or funding by state residents. Products "functionally similar" to sports betting are also covered, including parlays, moneyline, in-game and proposition bets. The order remains in effect until a final judgment in the case.
What Kalshi has to do
Compliance runs through a third-party geolocation provider licensed by the Michigan Gaming Control Board and capable of meeting the board's geofencing specifications — the same kind of location-verification technology long required of Michigan's licensed online sportsbooks. If Kalshi fails to do so, it must pay $500,000 for each day of noncompliance.
Within three business days, Kalshi must send the order to every futures commission merchant that offers its sports contracts, along with contact details for Michigan's lawyers. It will not be held liable for what those firms do next.
Background of the case
Attorney General Dana Nessel sued Kalshi in March under Michigan's Lawful Sports Betting Act, arguing the company lets residents bet on sports under the guise of trading event contracts. Kalshi moved the case to federal court and lost, returning it to Ingham County. A temporary restraining order followed in June, and both sides asked the judge to rule at an August 17 hearing. Kalshi's defense team includes Neal Katyal, a former acting U.S. solicitor general.
Nessel said the order protects residents from what she called Kalshi's "predatory, unlicensed practices."
Broader clash between states and federal regulators
Kalshi has fared worse in state courts than with its federal regulator: a Washington judge ordered it to drop most markets there in August, days after the Commodity Futures Trading Commission (CFTC) used emergency powers to keep it trading.
The CFTC has sued nine states over the same question, starting with Illinois, Arizona and Connecticut, then Wisconsin, and then Minnesota within hours of that state's ban taking effect. President Donald Trump has called state officials who oppose prediction markets "SCUM."
The dispute ultimately turns on a jurisdictional question: Kalshi operates as a CFTC-regulated designated contract market, which it argues places its event contracts under federal commodities law rather than state gaming statutes, while states contend that sports event contracts are sports betting and therefore subject to their licensing regimes. With overlapping rulings in state and federal court, the conflict appears headed for further appellate review, and the outcome could shape whether prediction markets can offer sports contracts nationwide or only on a state-by-state basis.
The Michigan order stands until a final judgment in the case.
