The temporary ban on Kalshi sports event contracts in Michigan received an extension this week.
Ingham County Circuit Court Judge Rosemarie Aquilina heard arguments from the state and Kalshi Monday and ultimately extended the ban on the prediction markets operator’s sports event contracts, according to InGame. Aquilina also ordered Kalshi geofence the state by the end of day Aug. 12.
Aquilina ruled on June 29 that the sports event contracts were illegal Michigan sports betting and ordered a two-week ban on the contracts or pay a $120,000. She later granted a pause on the geofencing requirement, letting the company block contracts on the state by user address.
The parties will appear in court again next week.
Kalshi could face $500K daily fine
Kalshi argued this week that it falls under the regulation of the Commodity Futures Trading Commission and the Commodity Exchange Act. Michigan lawyers argued the operator was incentivized to delay because of strong World Cup volume.
Following the arguments, Aquilina kept her view on gambling is under the state’s regulation and extended the temporary restraining order. She did not set an expiration for the restraining order.
If Kalshi does not geofence the state by Aug. 12, it could face a $500,000 daily fine for violating the order. Aquilina also said it could be punished if it further delays until the end of the 30-day period under the initial penalties.
Michigan is the second state to ban sports event contracts, following Nevada. The Nevada ban initially blocked users based on addresses before switching to an in-house geolocation service.
Michigan leading regulatory battle
Kalshi’s model depends on broad access and liquidity, but a state-by-state ban strategy starts to chip away at both. Kalshi, other prediction market platforms and the CFTC are in legal battles across the country attempting to assert federal regulatory jurisdiction.
Judges in various cases have ruled in favor of both Kalshi and the states. The issue is largely believed to be destined for the U.S. Supreme Court.
Beyond its legal battle with Kalshi, the Michigan Gaming Control Board recently left the National Council on Problem Gambling after the organization allowed Kalshi to join. Additionally, the MGCB has been among the most active regulators in looking to stop offshore and unregulated gambling operations in the state.
