A Michigan court has ordered Kalshi to halt all sports event contracts in the state and implement strict geofencing, with a $500,000 daily penalty for noncompliance. The ruling outlines seven regulatory violations and sets a new enforcement benchmark
Kalshi now faces a $500,000 daily penalty if it fails to block Michigan residents from accessing its sports event contracts, following a sweeping preliminary injunction issued by Michigan Circuit Court Judge Rosemarie Aquilina. The order, effective September 1, forces the federally regulated prediction market to halt all sports-related trading in the state and comply with state-level geolocation requirements—an enforcement move that sets a new bar for regulatory muscle in the U.S. prediction market sector.
Seven Violations Trigger Enforcement
Judge Aquilina’s order is not a generic ban—it’s a detailed indictment of Kalshi’s operations in Michigan. The court cited seven distinct violations, starting with Kalshi’s lower age threshold: while Michigan law sets the minimum online gambling age at 21, Kalshi allowed users as young as 18 to trade on sports outcomes. The judge warned that this gap could cause “irreparable harm” to Michigan’s youth.
The ruling also accused Kalshi of sidestepping Michigan’s responsible gambling protections, failing to implement the state’s patron safeguards, and exploiting mental health vulnerabilities. By operating outside the state’s licensing regime, Kalshi was found to have an “unfair advantage” over licensed operators, undermining both state tax revenue and funding for schools, economic development, and first responders. The court further highlighted the threat to Detroit’s gaming tax base and the financial sovereignty of Michigan’s tribal governments, which rely on regulated gaming revenue to fund essential services.
Immediate Compliance Demands
Kalshi must now cease all sports prediction market activity in Michigan, including accepting deposits, facilitating trades, and marketing any sports-related products to state residents. The order requires Kalshi to block new account creation and funding, and to notify every futures commission merchant (FCM) processing sports event contracts on its exchange—including major partners like Robinhood and PrizePicks—of the injunction by September 4.
Failure to implement a third-party, Michigan Gaming Control Board-licensed geolocation solution will trigger the $500,000 daily fine. The court’s rationale is clear: without robust geofencing, Michigan cannot reliably identify and recover any “ill-gotten gains” from unauthorized activity. This is not the first time a state has forced Kalshi to geoblock its market; as reported earlier, Washington imposed similar restrictions, but Michigan’s penalty structure is notably more severe.
Federal-State Clash and Industry Fallout
Kalshi’s defense hinges on its status as a federally regulated Designated Contract Market (DCM), arguing that exclusive federal jurisdiction should shield it from state-level enforcement. However, both the Michigan court and the U.S. Court of Appeals for the Ninth Circuit have rejected this argument. The Ninth Circuit recently dismissed Kalshi’s claim that it cannot comply with both state geofencing orders and federal DCM requirements, noting that other regulated entities use geofencing without issue and accusing Kalshi of seeking a competitive edge by refusing to do so.
The legal standoff escalated in July when the Commodity Futures Trading Commission (CFTC) ordered Kalshi to fulfill all open trades for Michigan users, directly contradicting the state court’s order. Kalshi’s Head of Enforcement, Robert DeNault, publicly described the company’s position as “impossible,” caught between conflicting state and federal directives. The CFTC did not respond to requests for comment on the ongoing dispute.
Broader Market Impact
Michigan’s aggressive enforcement is part of a broader crackdown on unlicensed gaming and prediction markets. The state has a history of targeting sweepstakes casinos and offshore sportsbooks, and was among the first to publicly challenge the legality of sports event contracts offered by platforms like Kalshi. Attorney General Dana Nessel’s office bypassed the usual cease-and-desist process, moving directly to litigation in March 2026. Kalshi’s attempt to shift the case to federal court failed, keeping the matter in state jurisdiction.
For operators, the message is unambiguous: state regulators are willing to impose massive financial penalties and demand technical compliance, regardless of federal oversight claims. For Michigan players, all sports event contracts on Kalshi are now off-limits, and any attempt to access the platform from within state lines risks triggering further enforcement. The industry is watching closely to see whether other states will follow Michigan’s lead or whether federal regulators will intervene more forcefully.
Geolocation is a technical process that uses device location data, IP addresses, and third-party verification to determine whether a user is physically present within a permitted jurisdiction. In regulated gambling markets, geolocation is mandatory to ensure compliance with state boundaries and prevent unauthorized access. Operators typically partner with licensed geolocation providers to enforce these restrictions, and failure to do so can result in substantial fines or loss of license. Michigan’s order against Kalshi demonstrates how geolocation enforcement has become a frontline issue in the battle between state and federal gambling oversight.
