Michigan regulators are the latest state gaming authority to announce action related to the burgeoning market of sports-related event contracts.
A press release from the Michigan Gaming Control Board (MGCB) announced the board is launching a formal investigation into sites like Kalshi and Robinhood that allow people to sell event contracts related to the outcome of a sporting event.
“The platforms, which bypass Michigan’s regulatory framework, have raised significant concerns about consumer protection,” the release stated.
MGCB says Kalshi, Robinhood lack internal controls
“We take consumer protection very seriously and are committed to ensuring that Michigan residents are engaging with safe and legal sports betting options,” said MGCB Executive Director Henry Williams. “Unlicensed entities not only pose a risk to consumers but also undercut the integrity and revenue-generating potential of the state’s regulated sports betting industry. We are actively investigating these practices and will pursue appropriate measures to protect Michigan bettors.
“By framing sports contracts as investment vehicles, these platforms risk confusing consumers and undermining the state’s commitment to responsible gaming. Moreover, many of these unlicensed platforms are often accessible to individuals as young as 18, in stark contrast to Michigan’s 21+ age requirement for legal sports betting.”
While Michigan and Ohio investigate these sites, several other states have gone so far as to send cease and desist letters to operators like Kalshi. Kalshi took regulators to court in Nevada and New Jersey and, so far, the courts have sided with Kalshi, but there is a long way to go.
Churchill Downs has similar case regarding federal oversight
In the meantime, Michigan continues to take action against a wide range of operators, including offshore operators and sweepstakes sites. Just this week, MGCB issued another 13 cease and desist letters to offshore casinos.
The MGCB is also dealing with a court case of its own that questions the balance of federal and state power when it comes to betting.
Churchill Downs was granted a preliminary injunction to keep offering advance deposit wagering (ADW) racing via its TwinSpires app in Michigan while the court case contesting MGCB’s cease and desist order moves on. The MGCB sent the cease and desist order after Northville Downs, the lone racetrack in Michigan, temporarily closed.
The MGCB contends it controls ADW apps in the state and revoked TwinSpires’ license to operate, while Churchill Downs argues that ADW apps are governed by the federal Interstate Horseracing Act.
Kalshi is making a similar case to the courts, except noting that the Commodities Exchange Act (CEA) grants sole authority to the Commodity Futures Trading Commission (CFTC) has sole oversight when it comes to event contracts.
