Prediction market operator faces daily six-figure fine if it cannot meet temporary restraining order’s geolocation requirement
A Michigan judge on Monday approved a temporary restraining order against Kalshi, requiring the prediction exchange to halt offering contracts on sporting events in the state.
In the four-page document, Ingham Circuit Court Judge Rosemarie E. Aquilina agreed with the request made by Michigan Attorney General Dana Nessel, saying the state and its citizens who benefit from the tax revenue generated by licensed sports betting operators suffer harm and have been “exploited by Kalshi’s sports betting operation masquerading as an investment opportunity.”
In addition, the judge added that by not adhering to Michigan’s gaming law, the New York-based online exchange enjoys “a massive and unfair advantage” over operators that abide by it. Further, Kalshi also ignores the sovereignty of the state’s tribal gaming operators.
“We remain committed to enforcing a level playing field for all gambling platforms in Michigan and ensuring that companies cannot evade accountability or exploit consumers under the guise of a prediction market,” Nessel said in a statement.
Kalshi, approved by the U.S. Commodity Futures Trading Commission to offer contracts on sports, argues that neither Michigan nor other states can block them since federal agency oversees prediction markets. It began offering sports contracts in January 2025, after the Trump Administration made changes within the CFTC that expanded what prediction markets can offer.
The commission has also filed lawsuits against states for seeking to block Kalshi, Polymarket and other exchanges.
The TRO came four days after a federal district judge rebuffed Kalshi’s attempt to have the case heard in that court. Aquilina’s order will stay in effect until July 13, at which time the state could receive a longer-lasting preliminary injunction.
Third-Party Solution Required
Michigan also becomes the third state to bar Kalshi from offering sports markets, joining Nevada and Massachusetts. Although, the Massachusetts ban is currently stayed as Kalshi wages an appeal.
Under the terms of the restraining order, not only must Kalshi block any trades on sports betting contracts in the state, but it must also use a third-party geolocation services provider licensed by the Michigan Gaming Control Board to stop Michigan users from accessing the sports markets. The court said it would consider letting Kalshi use a vendor licensed in another state if can meet the state’s geofencing requirements.
Aquilina ordered Kalshi to pay a fine of $120,000 for each day it can’t meet the geolocation requirements. She based that on a “conservative estimate” of the exchange’s $600 million daily trading volume, which she divided by 50 to determine the share of trades made in Michigan. The $120,000 fine represents 1% of the estimated share, which Aquilina considered to be Kalshi’s fees for facilitating trades.
The third-party stipulation comes after gaming regulators in another state said Kalshi’s geolocation software did not meet acceptable standards.
Earlier this month, officials in Nevada asked a judge in Carson City to find Kalshi in contempt of the injunction against it in that state because of its in-house geolocation solution, which Kalshi reportedly spent less than $200,000 to develop. According to court documents, Kalshi’s geolocation solution relies on a user’s IP address. In addition, Nevada officials claimed “family and friends” conducted testing for Kalshi.
Nevada gaming officials have also asked the court to fine Kalshi $120,000 per day, plus legal fees, until the exchange’s geolocation solution meets state standards.
Kalshi Vows to Fight Order
In a statement, Kalshi Head of Communications Elisabeth Diana told Gambling Insider that the company will contest the restraining order.
“Kalshi is subject to exclusive federal jurisdiction,” Diana said. “We won’t be bullied by interests that care more about protecting their monopolies than their consumers.”
Diana added that while it will seek to overturn the TRO, Kalshi will start “implementing restrictions.” Kalshi did not immediately respond to a follow-up message late Monday seeking additional information on its implementation plans.
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