A Michigan court has ruled that sports prediction contract trading on the Kalshi platform essentially amounts to sports gambling, ordering the company to halt its services within the state.
Reuters reported on Monday that Judge Rosemary Aquilina of the Ingham County Circuit Court granted Michigan Attorney General Dana Nessel’s request and issued a temporary restraining order against Kalshi.
The court barred Kalshi from offering sports-related event contracts to Michigan residents. It also mandated the use of a state Gaming Control Board-approved third-party geolocation service to ensure compliance.
The court warned of a hefty 120,000 USD daily fine for non-compliance.
In her ruling, Judge Aquilina stated that Kalshi was masquerading sports gambling as an investment opportunity. She warned that if left unchecked, this practice could inflict irreparable harm on Michigan residents, especially vulnerable populations.
This decision makes Michigan the second state, after Nevada, to judicially ban Kalshi’s sports event contract trading. Massachusetts issued a similar ban, but it’s currently suspended pending Kalshi’s appeal.
Kalshi promptly contested the ruling. Company spokesperson Elizabeth Diana announced plans to challenge the decision in court, asserting that Kalshi falls under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).
Kalshi, recently valued at 22 billion USD in a fundraising round, operates a platform for trading contracts that predict outcomes of various events, including sports games and election results.
State governments, however, argue that prediction market companies like Kalshi are operating without proper sports gambling licenses and circumventing state laws that prohibit betting by individuals under 21.
On the federal level, the CFTC has been supportive of Kalshi since the Donald Trump administration. The commission maintains that prediction market event contracts are financial products subject to federal, not state, regulation. This ongoing conflict between federal regulators and state governments over prediction markets is likely to persist in the foreseeable future.