A Michigan judge has temporarily ordered major prediction market platform Kalshi to block residents from participating in sports contracts, or placing sports bets, until 13 July. Ingham County Circuit Court Judge Rosemarie Aquilina, in a four-page ruling, stated that Kalshi had violated the state of Michigan’s gaming industry regulations by allowing people aged 18 to place wagers.
Details of Michigan ruling
The age requirement to wager or place bets in Michigan is 21. In her ruling, Judge Aquilina wrote that, with Kalshi allowing users from the age of 18 to wager, it had a “massive and unfair advantage over entities that comply with Michigan’s regulatory structure”.
She added that if Kalshi is allowed to continue offering sports wagers, then “the potential irreparable harm on Michigan’s youth would be profound”.
Aquilina ordered that Kalshi, for the applicable period until at least 13 July, is barred from engaging in any activity in connection with sports wagering in Michigan.
This conduct, she said, includes offering, listing, matching, executing, clearing, or settling any contract, instrument, or product that constitutes internet sports betting to any person located in Michigan or through any platform or channel accessible in Michigan. The Michigan judge continued that Kalshi is also barred from accepting deposits, stakes, considerations, or fees in connection with internet sports betting contracts located in Michigan.
Furthermore, she said that advertising, promoting, marketing, or soliciting participation in any internet sports betting contract to persons located in Michigan or using a Michigan address, “including via websites, mobile apps, email, push-notifications, social media, influencers, affiliates, or paid placements”, also falls under the restrictions of the order.
The final two points of Aquilina’s order are that account creation, verification, funding, or maintenance by any person located in Michigan for the purpose of accessing, viewing, trading, or settling internet sports betting is not permitted. Additionally, she wrote that designing, launching, or operating products “that are functionally similar to internet sports betting” is also restricted.
The Michigan judge wrote that Kalshi shall pay a fine of $120,000 per day for each day it fails to comply with the order’s geolocation requirements.
In a footnote to the ruling, it was explained that the fine amount is based on a “conservative estimate” taking Kalshi’s “$600 million/day trading volume, divided by 50 to approximate Michigan’s share of the transactions, and taking 1 per cent to estimate Kalshi’s fees on those transactions”.
Michigan Attorney General and Kalshi issue statements
In a statement addressing Aquilina’s ruling, Michigan Attorney General Dana Nessel said that the state’s gambling laws exist to protect Michiganders from “unlicensed, predatory operations”. She continued that failing to comply with those laws carries serious legal consequences.
Nessel commented that she is proud of the attorneys in her office “who not only kept this case in state court but also secured an order protecting residents as this litigation moves forward”.
“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,” she stated.
A Kalshi spokesperson said that the prediction market platform disagrees with the decision and would be fighting it in court. The spokesperson added that Kalshi would be implementing restrictions “in the meantime”.
Kalshi has faced similar situations in other states, including Kentucky and Massachusetts, where it was argued that Kalshi’s operations were functionally the same as sports betting offerings.
This ruling comes at a time when debates and clashes over whether states’ gambling laws apply to prediction markets and whether the CFTC has total jurisdiction over them in the United States are ongoing.
The CFTC has filed lawsuits against several states in its efforts to reaffirm its jurisdiction over prediction markets, and it is not entirely unlikely that the matter could go all the way to the US Supreme Court.
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