Michigan Blocks Kalshi Sports Contracts in Regulatory Fight

A Michigan judge has issued a temporary restraining order against Kalshi, halting its sports betting contracts and imposing potential $120,000 daily fines.

This legal development marks a new phase in the escalating conflict between U.S. state regulators and prediction markets, which argue they should fall under federal rather than local jurisdiction.

Judge Rosemarie Aquilina of the Ingham County Circuit Court issued a 14-day temporary restraining order (TRO), effective immediately and valid until July 13. During this window, the state may seek a longer-term preliminary injunction.

Strict Restrictions and Risk of Heavy Sanctions

The court order prohibits Kalshi from offering, settling, or advertising contracts that effectively function as online sports betting for Michigan residents. The company is barred from accepting deposits or fees related to these products and cannot maintain user profiles used to access such markets.

Furthermore, the platform is required to utilize a service provider licensed by the Michigan Gaming Control Board to ensure state residents cannot access sports contracts. Failure to comply with these requirements could result in Kalshi being fined $120,000 for every day the violation continues.

State Challenges the Kalshi Business Model

Michigan Attorney General Dana Nessel, who requested the restraining order, argues that the platform is essentially conducting unlicensed sports gambling by branding it as an investment product.

According to state authorities, Kalshi bypasses the regulatory framework that applies to licensed sports betting operators, including consumer protection rules, anti-addiction measures, and tax requirements. Court documents also state that the platform allowed individuals over 18 to participate, while licensed operators in Michigan are restricted to customers aged 21 or older.

Regulators also emphasized that Kalshi’s activities undermine the revenue of licensed operators, including local casinos that rely on the regulated sports betting market.

Growing Pressure on Prediction Platforms

The decision comes amid intensified scrutiny of prediction markets across the United States. Michigan is now the second state to successfully secure a court injunction against Kalshi’s sports contracts, following similar actions taken in Nevada earlier this year.

The company has consistently maintained that its contracts are regulated financial products under the oversight of the Commodity Futures Trading Commission (CFTC) and therefore do not fall under state gambling laws. However, recent judicial rulings suggest that courts are increasingly inclined to let such disputes be handled under local legislation rather than accepting arguments of federal supremacy.

The financial and gambling industries are monitoring the case closely, as it could set a major precedent for the future of prediction platforms in the U.S. This ruling arrives during a period of record activity in these markets, fueled by major sports events like the 2026 World Cup, raising critical questions about whether these products will be treated as financial instruments or a form of online gambling.