Michigan court blocks Kalshi prediction markets, citing illegal sports betting

Michigan’s attorney general announced that a state court had ordered a preliminary injunction against Kalshi, blocking the prediction markets platform for residents amid what officials called “sports betting [...] masquerading as an investment opportunity.”

In a Wednesday notice, Attorney General Dana Nessel said that the Circuit Court for the 30th Judicial Circuit in Ingham County approved an order blocking Kalshi from offering event contracts to state residents. The company could be fined up to $500,000 per day for violations.

“Kalshi long attempted to pass itself off as a legitimate gaming operation in our state, and I am relieved that this order further protects Michigan residents from its predatory, unlicensed practices,” said Nessel.

The Michigan court’s actions were the latest in a series of legal battles between prediction market companies like Kalshi and Polymarket and US state authorities. Nessel filed the lawsuit against Kalshi in March, alleging that the platform violated state law on sports gambling — a claim made in many similar lawsuits across the country.

Related: Kalshi issues first lifetime ban for Republican politician over insider bets

Notably, the preliminary injunction followed a Michigan court’s June restraining order barring Kalshi from offering sports betting to residents. The US Commodity Futures Trading Commission (CFTC) ordered Kalshi not to comply with the state order and continue operating, an action that the company described as putting it in an “impossible position.”

Cointelegraph reached out to Kalshi for comment but did not receive an immediate response.

New Jersey petitions US Supreme Court to weigh in on prediction markets

The Michigan state court order came the same day officials in New Jersey announced they had filed a petition for a writ of certiorari to the US Supreme Court over the state’s case against Kalshi. The case, if heard by the justices, could potentially end competing legal theories on whether the CFTC or state authorities have jurisdiction over prediction markets.

“[I]t would be reasonable for the Supreme Court to take it up, but they also may wait for the cases to be decided on the merits and not simply procedural issues like granting a preliminary injunction or not,” Melinda Roth, a visiting professor of practice at New England Law in Boston, told Cointelegraph. “Nevertheless, I still believe the Supreme Court will take this up, if not from New Jersey’s cert petition, then soon, given the amount of ongoing litigation in this area.”

Roth added:

“If and when SCOTUS takes it up, then this will likely decide whether sports event contracts are federally regulated by the CFTC or the states have the right to ban and/or regulate them as they see appropriate. I say ‘likely’ because Congress might actually act too. They could act before a SCOTUS review, or even after too.”

Some US lawmakers have proposed legislation to address Kalshi and Polymarket customers using insider information on event contracts. In March, Senators Adam Schiff and John Curtis introduced a bill to prohibit platforms registered under the CFTC from listing any event contract that “resembles a sports bet or casino-style game,“ referring jurisdiction to individual states’ authorities.