A Michigan judge has issued a preliminary injunction preventing Kalshi from providing sports event contracts within the state, citing potential harm to state gaming revenues, consumer protections, and tribal interests.
In a ruling dated September 1, Ingham County Circuit Court Judge Rosemarie Aquilina upheld restrictions initially set in June, following a request from Michigan Attorney General Dana Nessel for a temporary restraining order against Kalshi.
This injunction prohibits Kalshi from offering any sports event contracts in Michigan and also bans related activities such as advertising and soliciting contracts. Furthermore, Kalshi is required to engage a licensed third-party geolocation provider to prevent access from within the state. Non-compliance with these geolocation requirements could lead to a hefty fine of $500,000 per day.
The injunction will remain until a final order is issued in the case. Attorney General Nessel expressed relief, stating, “Kalshi has long tried to present itself as a legitimate gaming operation in our state, and this order further protects Michigan residents from its predatory, unlicensed practices.”
Kalshi is also obligated to inform every futures commission merchant (FCM) that offers its sports contracts to customers about the injunction within three business days. However, it will not be held responsible for the actions of the FCMs regarding customer interactions, as it does not control their clientele or location data.
Judge Aquilina emphasized that without this injunction, Michigan residents would face “immediate and irreparable harm.” She characterized Kalshi as a “sports betting operation masquerading as an investment opportunity.”
One significant concern raised was the discrepancy between Michigan's minimum sports betting age of 21 and Kalshi's policy allowing bets from individuals as young as 18. The judge noted that allowing Kalshi to continue operations could lead to severe harm to Michigan’s youth.
Additionally, the order pointed out that Kalshi exploits serious mental health issues and operates without the patron protections mandated by Michigan’s regulated gaming framework. This non-compliance gives Kalshi an unfair advantage over businesses adhering to state gaming regulations.
The financial implications of Kalshi's activities were also highlighted, with the judge noting that its operations undermine funding for schools, compulsive gambling prevention, and other essential services. The gaming tax revenue that supports law enforcement, public safety, youth programs, and infrastructure in Detroit was also at risk.
Furthermore, Judge Aquilina addressed the detrimental impact on tribal gaming interests, stating that Kalshi’s actions deprive tribes of necessary revenue to operate their governments and serve their communities, while disregarding their sovereignty.
Attorney General Nessel filed a lawsuit against Kalshi in March, claiming that the exchange's sports-event contracts amounted to unlicensed sports betting under Michigan's Lawful Sports Betting Act. Although Kalshi attempted to move the case to federal court, it was ultimately returned to Ingham County Circuit Court.
The situation was complicated further when the Commodity Futures Trading Commission instructed the exchange to continue processing trades involving customers from Michigan.