Kalshi Faces $500K Daily Fine as Michigan Extends Sports Market Ban
Key Points
- The Sept. 1 injunction keeps Kalshi’s sports event contracts unavailable in Michigan until the court issues a final order.
- The court requires the prediction market operator to use a state-licensed third-party geolocation provider, with a $500,000 fine for each day the court finds them noncompliant.
- Kalshi must send the injunction to every futures commission merchant distributing sports contracts processed through its exchange.
- The court based its harm analysis on Michigan’s 21+ wagering age, patron protections, gambling safeguards, public revenue and tribal interests.
Michigan Bans Kalshi Sports Prediction Markets With a $500,000-a-Day Penalty
Ingham County Circuit Court Judge Rosemarie Aquilina signed the preliminary injunction on Sept. 1, replacing the temporary restrictions that had kept Kalshi’s sports contracts blocked in the state since June. The order remains in force until the court enters a final order in Michigan’s lawsuit.
Attorney General Dana Nessel sued Kalshi in March, alleging its sports event contracts violate Michigan’s Lawful Sports Betting Act because the company offers what the state considers internet sports wagering without a Michigan Gaming Control Board license. Kalshi removed the case to federal court, but U.S. District Judge Paul Maloney sent it back to state court in June after rejecting Kalshi’s theories for federal jurisdiction.
The order reaches beyond Kalshi’s own platform
Aquilina’s injunction prohibits Kalshi from offering, listing, matching, executing, clearing or settling products that qualify as internet sports betting for people located in Michigan. It also bars related deposits and fees, marketing and solicitation, and account activity used to access the prohibited sports products.
The wording goes further by specifically covering products that are functionally similar to conventional sports wagering. The order names single-game bets, teasers, parlays, totals, moneylines, pools, exchange betting, in-game betting, proposition bets and straight bets.
Kalshi must use a third-party geolocation provider licensed by the Michigan Gaming Control Board and capable of meeting the regulator’s technical geofencing requirements. The $500,000 penalty applies for each day the court finds Kalshi failed to comply with that requirement, up from the $120,000-per-day penalty attached to the earlier temporary restraining order.
The distribution requirement is also notable. Within three business days, Kalshi was ordered to provide the injunction and the state’s counsel information to every futures commission merchant making sports contracts processed through its exchange available to customers. The judge expressly said Kalshi will not be liable under that provision for what an FCM does after receiving notice, recognizing that Kalshi does not control which customers those intermediaries serve.
The court tied irreparable harm to Michigan’s gambling safeguards
Aquilina’s reasoning gives the order more significance than a routine geofencing dispute. In finding that Michigan had shown irreparable harm, the judge pointed first to the state’s minimum gambling age of 21 compared with Kalshi allowing participation beginning at 18.
The order also cites responsible gambling protections, patron safeguards, the competitive position of licensed gaming companies and tax revenue supporting schools, compulsive gambling prevention, first responders and other public programs. Aquilina separately found potential harm to tribal governments and sovereignty from gaming revenue being diverted outside the state-regulated system.
The court described Kalshi’s product as a “sports betting operation masquerading as an investment opportunity.” That language reflects a preliminary injunction ruling rather than a final determination on the merits, but it leaves little ambiguity about how Aquilina currently views the underlying product.
Nessel was equally direct after the order. “Kalshi long attempted to pass itself off as a legitimate gaming operation in our state,” the attorney general said in a Sept. 2 statement, adding that her office would continue enforcing Michigan’s gaming laws.
Kalshi continues to dispute the state’s authority. The company has maintained that sports event contracts offered through a federally regulated exchange fall within the CFTC’s jurisdiction rather than state gambling law.
Why This Matters for Bettors
For bettors physically located in Michigan, the immediate consequence is straightforward: Kalshi’s sports contracts remain unavailable while the case continues. That is particularly consequential for customers ages 18 to 20, who can access Kalshi under its general eligibility rules but cannot legally wager through Michigan-licensed sportsbooks.
For bettors elsewhere, the immediate impact is limited. This is a Michigan state-court preliminary injunction involving the parties before that court; it does not itself shut down Kalshi sports markets nationally or establish binding precedent for another state.
The wider significance comes from how Michigan persuaded the court to define the alleged harm. The state did not rely only on whether Kalshi technically fits Michigan’s statutory definition of sports betting. It tied the dispute to age restrictions, responsible gambling requirements, consumer safeguards, regulatory costs, tax revenue and tribal gaming interests. Other regulators fighting similar cases now have a detailed state-court roadmap for arguing why allowing sports event contracts during litigation creates immediate harm.
That argument is arriving at a particularly important moment. On Aug. 28, the Ninth Circuit held in Kalshi’s Nevada litigation that its sports event contracts are sports bets rather than federally protected swaps, rejecting Kalshi’s attempt to preempt state gambling regulation. Days later, New Jersey asked the U.S. Supreme Court to resolve the conflict between that ruling and the Third Circuit’s earlier Kalshi-friendly decision.
The FCM provision could prove nearly as important as the geofence itself. Prediction markets increasingly reach customers through intermediaries, so an order focused only on a platform’s proprietary app can leave a distribution problem unresolved. Michigan’s approach puts those downstream channels on formal notice while carefully stopping short of making Kalshi responsible for conduct it cannot control.
What Happens Next
Kalshi must continue blocking its disputed sports products in Michigan and maintaining the court-ordered geolocation controls while the underlying lawsuit proceeds, unless the injunction is modified or overturned. The order itself remains effective until the court enters a final order.
Kalshi has made clear that it will continue contesting state jurisdiction, while Michigan is pressing the opposite theory: sports event contracts that function as wagers must comply with the same state framework governing other sports betting products.
The national issue is moving on a separate track. With federal appellate courts now divided and New Jersey formally seeking Supreme Court review, Michigan’s case may eventually be affected by a broader ruling on where CFTC authority ends and state gambling regulation begins. Until then, expect other states to study both Michigan’s harm analysis and its attempt to reach the intermediary distribution layer.
Marcus has spent over 20 years navigating the legal side of online betting - from his early days consulting for offshore operators to helping licensed U.S. sportsbooks launch in regulated markets. He’s worked with compliance teams, reviewed licensing frameworks in 15+ states, and advised on some of the biggest regulatory shifts since PASPA was repealed.
At BettingScanner, Marcus serves as the voice of reason - translating legalese into plain English and helping bettors understand what’s legal, what’s risky, and where the gray areas live. If you’re ever unsure about the rules, Marcus is your man - as he probably helped write them.
