A Michigan judge has temporarily blocked Kalshi from offering sports event contracts in the state, making Michigan the second state after Nevada in which a court order against the prediction market operator’s sports markets has taken effect.
Ingham County Circuit Court Judge Rosemarie Aquilina granted Michigan’s request for a temporary restraining order Monday, barring Kalshi from activity tied to what the order describes as sports wagering in Michigan. The order also requires Kalshi to use a third-party geolocation provider licensed by the Michigan Gaming Control Board (MGCB) or another provider approved by the court.
“It’s no surprise that we disagree with the state’s decision and will fight it in court,” Kalshi’s head of communications, Elisabeth Diana, said in a statement shared with DeFi Rate. “Kalshi is subject to exclusive federal jurisdiction. We won’t be bullied by interests that care more about protecting their monopolies than their consumers. In the meantime, we’re implementing restrictions.”
Kalshi did not respond to questions about how it is complying with the order’s geolocation requirement.
The Michigan order adds to a widening state-court fight over whether Kalshi’s federally regulated event contracts can be treated as illegal sports betting under state law. Nevada has an active injunction against Kalshi and is pressing a contempt fight over alleged geolocation failures. Massachusetts also won a preliminary injunction, but that order has been stayed pending appeal.
What the Michigan order does
Aquilina’s order bars Kalshi, its officers and anyone acting with the company from engaging in activity connected with sports wagering in Michigan, including offering, listing, matching, executing, clearing, settling or otherwise facilitating sports-related contracts to anyone located in the state.
The order says that, to comply, Kalshi must use a third-party geolocation services provider licensed by the MGCB and capable of meeting the board’s geofencing specifications. Kalshi may propose a provider licensed by another state’s gaming regulator, but the court would decide whether that provider is sufficient.
Kalshi must pay $120,000 per day for each day it fails to comply with the geolocation requirement. A footnote in the order says the penalty was calculated using an estimate of $600 million in daily trading volume, Michigan’s estimated share of that volume and an assumed 1% fee rate for Kalshi.
Kalshi appears to have started restricting Michigan sports access. An Ann Arbor-based Kalshi user posted on X that he was blocked from opening sports positions in Michigan. He shared a platform message that said, “Michigan residents are not currently allowed to open positions in Sports. Check your email for more details.”
The temporary restraining order is set to remain in effect until July 13. After that, Michigan would need the court to extend the order or enter a preliminary injunction to keep the restrictions in place, unless the parties reach another arrangement or Kalshi obtains a stay.
Prediction markets clash with sportsbook licensing model
The Michigan fight highlights a broader industry split over whether sports prediction markets should be able to operate nationally under federal derivatives law or be forced into the state-by-state licensing model used by online sportsbooks.
Michigan Attorney General Dana Nessel defended the order Monday, writing on X that Michigan’s gambling laws “exist to protect Michiganders from unlicensed, predatory operations” and that failing to comply with them “carries serious legal consequences.”
Alex Kane, founder and CEO of Sporttrade, pushed back on that argument Tuesday. Kane’s comments come as Sporttrade is trying to bridge the two regulatory models. The company has operated as a state-regulated sports betting exchange, but this year filed Commodity Futures Trading Commission applications to register as both a designated contract market (DCM) and derivatives clearing organization (DCO), the exchange-and-clearing structure used by federally regulated prediction market platforms.
“In reality, Michigan’s gambling laws exist to enrich casinos at the expense of innovators, entrepreneurs, and new businesses,” Kane wrote on X. “To even apply for a license, an online operator must pay tens of millions of dollars to a land-based casino.”
Kane called Michigan casinos “statutorily imposed gatekeepers,” tying the Michigan fight to a broader criticism from exchange-model operators that state sports betting regulations were built around casino-tethered sportsbook licensing, not peer-to-peer trading platforms.
How Michigan compares with other state cases
Michigan’s geolocation requirement mirrors the next phase of Kalshi’s fight in Nevada, where regulators are already asking a court to hold the company in contempt over alleged geofencing failures.
The Nevada Gaming Control Board sued Kalshi earlier this year and secured a temporary restraining order in March, followed by a preliminary injunction in April. The board said the injunction blocked Kalshi from offering sports, election and entertainment event contracts in Nevada without a state gaming license.
The dispute has since shifted from whether Nevada could secure an injunction to whether Kalshi is complying with it. In a June contempt filing, Nevada regulators said Kalshi was still allowing covered contracts to be traded from inside the state. That is despite a court order requiring the company to geofence Nevada users.
Nevada sharpened that argument in a reply brief, saying Kalshi’s claimed compliance relied on a “homegrown technological solution” rather than a tested third-party geolocation provider. The board said Kalshi told regulators it spent about $190,000 to build an in-house system using IP addresses, after previously telling a federal court that geofencing could cost “up to tens of millions of dollars annually.”
Regulators argued that the approach was inadequate because IP-based location checks can be unreliable at the state level, especially for mobile devices, and can be circumvented with VPNs or proxies. Nevada also said Kalshi described testing the system through “family and friends,” which the board argued fell short of rigorous geolocation testing.
In Massachusetts, Attorney General Andrea Campbell secured a preliminary injunction in January that would block Kalshi from accepting online sports wagers and related event contracts from Massachusetts customers unless it complied with state sports gaming laws, including Massachusetts Gaming Commission licensure. But that injunction has been stayed pending appeal, so the block on those event contracts has not taken effect.
States test multiple paths against sports contracts
Michigan’s order shows one path states are using to challenge sports prediction markets: asking courts to block Kalshi from offering sports contracts unless it complies with state gaming laws.
Other states have tried to address the same issue through legislation. Kentucky enacted new restrictions tied to prediction market activity. New Jersey lawmakers advanced prediction market bills after the state’s court fight with Kalshi, and other states have considered measures that would tax, restrict or regulate event contract activity.
The fight is also drawing attention in Washington. Senators John Curtis and Adam Schiff introduced the Prediction Markets Are Gambling Act in March, which would prohibit CFTC-registered entities from listing contracts that resemble sports bets or casino-style games. The senators said the bill would reinforce their view that the Commodity Exchange Act does not permit sports gambling and “remove any ambiguity” in the statute.
The Michigan order does not settle the national debate over sports prediction markets, but it gives state regulators another enforcement model by forcing platforms to block access first and fight over federal preemption later.
