Days after losing a bid to move into federal court, Kalshi suffered another defeat Monday when a Michigan judge temporarily barred the company from offering sports event contracts.
Circuit Court Judge Rosemarie Aquilina on Monday granted a temporary restraining order (TRO) sought by Michigan Attorney General Dana Nessel enjoining Kalshi from making sports markets available in the state. Aquilina’s order also requires Kalshi to utilize a third-party geolocation service to ensure it does not allow people located in Michigan to access its products during the 14-day order period.
Additionally, Kalshi faces fines of up to $120,000 per day if it fails to comply with the geolocation portion of the TRO, which was first reported by The Event Horizon.
“Our gambling laws exist to protect Michiganders from unlicensed, predatory operations, and failing to comply with them carries serious legal consequences,” Nessel said in a statement. “I am proud of the attorneys in my office who not only kept this case in state court but also secured an order protecting residents as this litigation moves forward.
“We remain committed to enforcing a level playing field for all gambling platforms in Michigan and ensuring that companies cannot evade accountability or exploit consumers under the guise of a prediction market.”
The temporary order also instructs Kalshi not to advertise its products and not to accept any new registrations in Michigan while the original case continues in state court.
In a statement responding to the original report, a Kalshi spokesperson said, “It’s no surprise that we disagree with the state’s decision and will fight it in court. Kalshi is subject to exclusive federal jurisdiction. We won’t be bullied by interests that care more about protecting their monopolies than their consumers. In the meantime, we’re implementing restrictions.”
How Michigan case against Kalshi case got here
Monday’s order limiting Kalshi’s operation in Michigan comes more than three months after Nessel initially sought a permanent injunction in Ingham County Court. That original filing asks the court to “declare Kalshi’s internet sports betting operation a common law nuisance and to issue a permanent injunction and order of abatement enjoining and restraining Kalshi from engaging in or advertising its internet sports betting operation in Michigan.”
“Kalshi operates a so-called prediction market through which residents of the State of Michigan can engage in unlicensed gambling under the guise of trading event contracts,” the filing reads in part.
Nessel said in a statement at the time, “Corporations cannot circumvent state gaming laws. My office will hold those who sidestep Michigan’s consumer protections accountable and ensure that betting in our state remains lawful, fair and subject to the oversight our residents expect and deserve.”
Polymarket immediately responded to Nessel’s move against Kalshi by filing for injunction to prevent Michigan from banning event contracts. The company’s bid for a TRO was denied a week later and its ask for injunctive relief was rejected June 17.
How long will state actions on Kalshi matter?
Among numerous other state-level court actions, the Massachusetts Supreme Court is deliberating on Kalshi’s future and an Arizona court battle over criminal action against the prediction markets operator roils on as well.
Yet a greater question looms above the mounting state cases targeting Kalshi and Polymarket: how long will they actually matter? The answer lies at the federal level, where many industry observers expect disparate recent rulings in the Third and Sixth Circuit Courts of Appeals to eventually head to Washington, D.C. for an ultimate decision.
Speaking at this month’s SBC Summit Americas in Ft. Lauderdale, Fla., Ian Mcginley, a former CFTC Director of Enforcement now operating in private practice, sees the Supreme Court ultimately taking up the issue.
“Most people think that the first type of lawsuit, the state authorities against a number of prediction markets, will reach the Supreme Court. Anytime you have courts taking different views of the law, it tends to be ripe for the Supreme Court,” Mcginley said during a panel discussion on prediction markets.
