The Attorney General of Michigan, Dana Nessel, has successfully obtained a preliminary injunction against Kalshi, prohibiting the prediction market firm from offering sports contracts within the state.
This legal order mandates that Kalshi implement geofencing measures to prevent access to its sports contracts for Michigan residents and anyone present in the state. Any breach of this order could lead to a hefty fine of $500,000 per day.
Nessel expressed her relief regarding the injunction, stating, “Kalshi has long tried to present itself as a legitimate gaming entity in our state, and this order provides further protection for Michigan residents against its predatory and unlicensed operations. My office will continue to uphold the rights of Michiganders and enforce our gaming regulations to ensure that gambling revenues are properly regulated and reinvested into our communities.”
The lawsuit against Kalshi was initiated by Nessel in March, accusing the company of breaching the Lawful Sports Betting Act (LSBA) by offering sports betting through event contracts without the necessary approval from the Michigan Gaming Control Board (MGCB).
The lawsuit claims that Kalshi runs an online platform enabling Michigan residents to place bets on sports outcomes disguised as trading event contracts. The Attorney General’s office argues that this activity amounts to unlicensed gambling under state law.
In response, Kalshi attempted to transfer the case from state court to the US District Court for the Western District of Michigan. However, Nessel filed a motion to remand the case back to state court, which was approved, sending the lawsuit back to the Ingham County Circuit Court.
A judge from Ingham County ruled in favor of Michigan in June, issuing a temporary restraining order that barred Kalshi from offering sports-related contracts while the legal proceedings continued. This restriction remained in effect until mid-July.
In July, the MGCB also terminated its membership in the National Council on Problem Gambling, following the council’s acceptance of a $2 million partnership with Kalshi earlier in the year.
In a communication to the council, MGCB Executive Director Henry Williams stated that this partnership contradicted Michigan’s efforts to combat what officials label as ‘unlicensed’ and ‘illegal’ sports betting.
Williams raised concerns about Kalshi’s marketing of its contracts as “investments” rather than gambling products, suggesting this could undermine responsible gambling initiatives and create confusion for consumers regarding applicable safeguards.
In July, Kalshi asserted its disagreement with Michigan’s stance and announced plans to defend itself in court, claiming that it falls under exclusive federal jurisdiction.