A Michigan court temporarily halted operations of prediction market platform Kalshi in the state, marking an early legal victory for the Attorney General Dana Nessel in a dispute over whether corporate event contracts should be treated as sports betting under Michigan law.
Ingham County Circuit Judge Rosemarie Aquilina issued a temporary restraining order on June 29 preventing Kalshi from continuing to offer its products in Michigan while the case continues. The order follows a lawsuit filed by Nessel in March that accused Kalshi of conducting activities comparable to sports betting without obtaining the necessary licenses from state-regulated sportsbooks and casinos.
According to the Detroit Free Press, the judge wrote: “Michigan and its most vulnerable citizens have suffered and will continue to suffer immediate and irreparable harm if there is no relief from the exploitation of Kalshi’s sports betting operations masquerading as investment opportunities.”
Court Places Temporary Restrictions on Kalshi
The ruling places broad restrictions on the New York-based company’s activities in Michigan. Aquilina prohibited Kalshi from offering betting or event contracts, accepting deposits, advertising its services, opening new accounts, or introducing similar products in the state during the period covered by the order.
This temporary restraining order remains in effect until July 13 while additional legal proceedings continue. Court records do not show an upcoming court date.
Aquilina also directed Kalshi to use a third-party geolocation provider licensed by the Michigan Gaming Control Board to ensure compliance with the restrictions. Under the order, companies could face fines of $120,000 per day if they fail to comply with geolocation requirements.
Michigan became the second state to obtain a court order to terminate Kalshi’s event contract, after Nevada. A similar order in Massachusetts has been halted while the company appeals.
States Express Concerns About Consumer Protection
Michigan legalized online gambling in 2021 and requires operators to obtain approval from the Michigan Gaming Control Board. One of the issues highlighted in this case is the age requirement. Kalshi allows participation starting at age 18, while online sportsbooks regulated in Michigan require users to be at least 21 years old.
The judge cited several concerns in his decision, including the impact on younger users and the lack of protections found in the state’s gaming framework. Court filings include Aquilina’s statement: “If Kalshi is allowed to continue offering sports betting, the potential irreparable harm to Michigan’s youth would be enormous.”
Additional findings referenced in court documents state that “Kalshi is taking advantage of serious mental health issues without providing the protections that Michigan’s regulatory structure was designed to do.” and that the company ignored customer protection measures required by licensed operators.
The filing also states that Kalshi made a profit “huge and unfair advantage” by operating outside Michigan’s gaming regulations. Another concern raised in the case involves public funding tied to gaming revenue. According to court documents, “Kalshi undermined Michigan’s funding for schools, compulsive gambling prevention, economic development, and first aid.”
The judge further noted concerns about the impact on tribal governance, and wrote that “Kalshi’s actions negatively impacted the tribes by depriving them of the revenue they needed to run their government and serve their citizens, while ignoring their sovereignty.”
Janine Ruggiero from the Michigan Association for Problem Gambling supported the court’s concerns regarding younger participants. He says, “At 18, the mind is not yet mature enough to have control over impulse control, to not get swept up in the hype.”
Kalshi Defends Federal Laws Governing Its Business
Kalshi has consistently argued that its products fall under the purview of federal and not state gambling regulations. The company describes its platform as a prediction market where users trade contracts tied to the outcome of future events rather than placing traditional bets.
The company’s markets cover a wide range of topics, including sports, politics, business developments and cultural events. Featured contracts include predictions regarding the FIFA World Cup, NCAA March Madness, Elon Musk’s net worth, LeBron James’ next NBA team, and future presidential candidates.
Kalshi spokesperson and Head of Communications Elisabeth Diana said the company would comply with the court order while continuing to challenge it.
"It is not surprising that we disagree with the state’s decision and will fight it in court,” Diana said. "We will not be oppressed by parties who are more concerned with protecting their monopolies than their consumers. In the meantime, we are implementing restrictions.”
In a separate statement, Diana said, "It is not surprising that we disagree with the state’s decision and will challenge it in court. Kalshi is subject to exclusive federal jurisdiction. We will not be bullied by parties who are more concerned with protecting their monopoly than their consumers.”
He also stated that the company would implement restrictions “to comply with a court order even though we believe the order is wrong.”
Kalshi recently received a $22 billion valuation in a funding round and remains a central figure in the broader legal debate over prediction markets. The company and similar platforms argue that the contracts traded on their exchanges fall under the authority of the US Commodity Futures Trading Commission (CFTC). Under the President Donald Trumpadministration, the CFTC has supported the view that these event contracts are within the agency’s jurisdiction.
Kalshi previously sought to move the Michigan case to federal court. That effort failed when U.S. District Judge Paul Maloney ruled that Michigan’s gambling laws were not superseded by federal trade regulations and returned the matter to state court.
