A Michigan Circuit Court judge ordered Kalshi to cease operations related to sports event contracts in the state, enforcing a geoblock to prevent access or face a daily penalty of $500,000. This ruling was delivered by Judge Rosemarie Aquilina, who granted a preliminary injunction requested by state Attorney General Dana Nessel.
The decision follows a temporary restraining order issued against Kalshi on June 29. In a statement released on September 2, Nessel expressed her satisfaction with the ruling, emphasizing the need to protect Michigan residents from what she described as Kalshi's predatory practices. "My office will continue to defend Michiganders and enforce our gaming laws," Nessel stated, highlighting that funds from regulated gambling support local communities.
Judge Aquilina outlined seven specific reasons for the injunction. First, she noted the state's regulation mandates a minimum gambling age of 21, while Kalshi allows users as young as 18 to engage in sports trading, which could inflict lasting harm on Michigan's youth.
Second, Aquilina indicated that Kalshi exploits serious mental health issues without the safeguards meant to protect users as established by Michigan law. Third, she stated that Kalshi bypasses critical patron protection measures set out in the state's regulatory framework.
The judge further pointed out that Kalshi's non-compliance with state gambling laws provides it with a significant, unfair advantage over state-licensed operators. Additionally, she remarked that Kalshi undermines state funding, which supports schools, gambling prevention initiatives, economic development, and first responders.
Aquilina also raised concerns regarding municipal funds, specifically those belonging to Detroit, which are generated through gaming taxes that support essential public services. Finally, she addressed potential negative impacts on Michigan’s tribes, arguing that Kalshi's operations deprive them of necessary revenue and disregard their sovereignty.
As a result of the injunction, Kalshi is required to:
1. Stop offering any sports prediction market trading or products similar to internet sports betting within Michigan.
2. Cease accepting deposits related to sports event contracts.
3. Block the creation of new accounts or funding.
4. Halt all advertising concerning sports products, whether through its channels or via third parties, including influencers.
By September 4, Kalshi must also inform every futures commission merchant that processes sports event contracts on its exchange, including Robinhood and PrizePicks, of the preliminary injunction order.
Kalshi is now mandated to use a licensed third-party geolocation service to enforce the geoblock for Michigan residents. Judge Aquilina stated that if Kalshi fails to comply, it will incur a fine of $500,000 per day for each day of non-compliance. This requirement aims to protect the state’s interests in tracking potential illicit gains.
In response, Kalshi’s Head of Communications, Elisabeth Diana, reiterated the company's intent to contest the decision in court, maintaining that it operates under federal jurisdiction and won’t be intimidated by vested interests.
The ruling follows a recent decision by the U.S. Court of Appeals for the Ninth Circuit, which criticized Kalshi's position that it cannot comply with both state geofencing orders and federal DCM requirements simultaneously.
Michigan has been proactive in regulating predatory gaming operations, expressing its opposition to unregulated prediction markets while actively pursuing enforcement actions. AG Nessel had filed a lawsuit against Kalshi in early March without prior notice, a move that differentiated Michigan from other states that engaged in preliminary enforcement communication. Kalshi’s attempted relocation of the case to federal court was denied, ensuring it remains under the jurisdiction of the Ingham County Circuit Court.
After the TRO was issued, the Commodity Futures Trading Commission (CFTC) took an unusual step by directing Kalshi to uphold trades for Michigan users in direct violation of the state court's directive. Kalshi expressed disappointment with the CFTC's order, stressing their compliance with state directives to unwind applicable trades and lamenting the conflict between following state and federal directives.
