CryptoSlate
A Michigan judge placed prediction-market exchange Kalshi under a preliminary injunction barring it from offering sports event contracts to state residents, with a $500,000 daily penalty for each day the company fails to meet the Michigan Gaming Control Board's geofencing specifications. The Sept. 1 order reaches deposits, advertising, solicitation, account access, and functionally similar sports-betting products in Michigan, and it pulls in any intermediary that can route customers to Kalshi's exchange. Kalshi must use a third-party geolocation vendor licensed by the MGCB and notify every futures commission merchant carrying its sports event contracts within three business days. The injunction replaces a June temporary restraining order that carried a $120,000 daily noncompliance penalty, and it remains in force until the court issues a final order.
Why it matters
Kalshi frames its sports products as federally regulated event contracts under the Commodity Exchange Act, while Michigan treats them as unlicensed internet sports betting. That classification fight is the entire case, and the new order escalates the financial stakes well past routine state-level sportsbook enforcement. Kalshi's federal preemption defense is now losing ground: the Third Circuit preserved preliminary protection for the exchange against New Jersey in April, but the Ninth Circuit ruled the other way in Nevada on Aug. 28, and Michigan's injunction adds a third data point in a state-court posture that does not have to wait on the CFTC.
Market impact
The injunction does not settle the national question. CFTC has argued it holds exclusive jurisdiction over prediction markets listed on designated contract markets, and the appellate split between the Third and Ninth Circuits leaves Kalshi, Polymarket and other event-contract operators facing a patchwork of state-specific rules rather than a uniform federal regime. For intermediaries, the practical read is sharper: any FCM carrying Kalshi's sports event contracts now sits inside a regulator-notice chain with real daily penalty exposure if geofencing slips.
Frequently asked questions
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What did the Michigan court order Kalshi to do?
A Sept. 1 preliminary injunction bars Kalshi from offering sports event contracts to Michigan residents and from related deposits, advertising, solicitation, and account access until a final order. Kalshi must use an MGCB-licensed geolocation vendor and notify every FCM carrying its sports contracts within three…
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How much are Kalshi's daily fines in Michigan?
The preliminary injunction sets a $500,000 daily penalty for each day Kalshi fails to meet the Michigan Gaming Control Board's geofencing specifications. That replaces a June TRO that had carried a $120,000 daily noncompliance penalty.
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Is Kalshi's federal preemption defense still alive?
Partially. The Third Circuit preserved preliminary Kalshi protection against New Jersey in April, but the Ninth Circuit ruled against Kalshi in Nevada on Aug. 28. Michigan's injunction adds a state-court ruling that does not rely on resolving the federal preemption question, so Kalshi's defense is intact in name but…
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Does this ruling apply outside Michigan?
No. The injunction applies only inside Michigan and does not resolve the national conflict over whether the CFTC has exclusive jurisdiction over prediction markets on designated contract markets. Operators, FCMs, and intermediaries continue to face different rules across jurisdictions until the appellate split is…
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How does the Michigan order affect FCMs and intermediaries?
Kalshi must send a copy of the order and Michigan counsel contact details to every futures commission merchant carrying its sports event contracts within three business days. The order reaches intermediaries that can give customers access to Kalshi's exchange, though Kalshi itself is not held liable for an FCM's later…
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