Michigan Gains Injuction Forcing Kalshi to Geofence Sports-Event Contracts

Michigan judge says Kalshi masquerades as an investment site

Judge Rosemarie Aquilina of the 30th Judicial Circuit Court of Michigan's Ingham County was the arbiter who granted Nessel the preliminary injunction. In her ruling, Aquilina called Kalshi “a sports betting operation masquerading as an investment opportunity.” This was according to reporting by the Michigan Advance.

It was Judge Aquilina who also previously issued the temporary restraining order to Nessel. Aquilina was basing her decision to grant Nessel a temporary restraining order on allegations of harm to Michigan residents ages 18 to 20. They can make trades on Kalshi but are not old enough to participate in legal sports betting in the state. The age of majority to bet on sports in Michigan is 21.

Kalshi attorney Andrew Porter sent a letter to Nessel. He indicated that he wants to see Nessel pursue similar legal action against Kalshi's competitors. Otherwise, they will challenge this ruling on those grounds.

“Kalshi disputes that harm, but recognizes that, if it exists, it is inflicted equally by other market participants that presently are allowed to operate in Michigan,” Porter said in the letter. “As such, Kalshi must reserve its right to move for dissolution of the Court’s forthcoming preliminary injunction order in the event Michigan does not seek to address the purported harms inflicted by Kalshi’s competitors.”

That group would include Polymarket, Crypto.com, Robinhood, and Coinbase.

Nessel labels sports-event contracts as illegal sports betting

Nessel argues that Kalshi is operating without the licensing approval of the Michigan Gaming Control Board.

“Kalshi long attempted to pass itself off as a legitimate gaming operation in our state," Nessel said. "I am relieved that this order further protects Michigan residents from its predatory, unlicensed practices.

“My office will continue to defend Michiganders and enforce our gaming laws, which ensure gambling revenue is regulated and distributed back into our communities.”

Kalshi's lawyers insist Michigan has no standing to regulate its product

To meet the requirements of the judge's order, Kalshi must contract a third-party geolocation service. This will ensure it is not accepting wagers from anyone in Michigan.

Lawyers from the company continue to make the same argument. They believe that only one organization has the right to regulate prediction market sites. That would be the federal Commodity Futures Trading Commission (CFTC).

“To be clear, it remains Kalshi’s position that event contracts traded on federally regulated designated contract markets are subject to the exclusive jurisdiction of the Commodity Futures Trading Commission," Porter said. Backing him up in this defense was Kalshi's head of communications, Elisabeth Diana.

“It’s no surprise that we disagree with the state’s decision and will fight it in court,” Diana said in a statement. “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.”