Judge Extends, Modifies Restraining Order Against Kalshi in Michigan

A Michigan judge has extended her restraining order against Kalshi in Michigan, with stiff potential penalties if the site hasn’t geofenced the state by the middle of next month.

Ingham County Judge Rosemarie Aquilina’s original temporary restraining order against Kalshi in Michigan had been good through July 13. That required the site to block any users in Michigan, which the prediction market operator argued wasn’t realistic.

Aquilina accepted that argument to an extent. Under the terms of the new TRO, Kalshi can comply with her order by blocking anyone with a Michigan address from registering for the site. However, people visiting the Great Lakes State can still access Kalshi until Aug. 12.

At that point, Kalshi must geofence Michigan or show why it needs an extension, giving the platform 30 days to fully comply with Aquilina’s order. The judge did not set an expiration date for her order.

What Are the Terms of the Order Against Kalshi in Michigan?

The immediate effect is that Kalshi is now inoperable for anyone with a Michigan address. On sign-up, Kalshi requires users to provide their address. That’s part of its Know Your Customer requirements, and it makes blocking users by address an easy fix.

That’s why Aquilina allowed Kalshi to take that approach for the time being. She admitted that geolocation can be complex, and she didn’t attempt to make herself an expert on it. Instead, she stressed that the efforts of Kalshi in Michigan must show a good-faith effort to work on geolocation.

To provide incentive, Aquilina increased penalties to $500,000 per day past Aug. 12 if Kalshi has not complied. She indicated that she’s willing to delay penalties if Kalshi can show genuine issues with implementing geolocation, but not if the site hasn’t made a real attempt.

How Are Users Affected Regarding Kalshi in Michigan?

If you signed up for Kalshi with a Michigan address, you’re essentially frozen from using it until Aug. 12. Because Kalshi is blocking by address and not geolocation, traveling to a state where Kalshi is legal will not work.

Kalshi could change how it operates before that date. That’s possible, especially after the men’s World Cup ends on July 19. The men’s World Cup has led to an explosion of activity on Kalshi this summer, and the prediction market operator has every incentive to retain that revenue.

Michigan attorney general Dana Nessel’s office stated that they believe Kalshi played up geolocation difficulties in order to stay legal through the World Cup. However, the NFL and college football are also big money-makers in online sports betting. Those both begin after the geofence requirement becomes mandatory.

How Is the CFTC Involved?

On July 14, the Commodity Futures Trading Commission complicated things by ordering Kalshi to ignore Aquilina’s order. The CFTC called for an emergency stay of the judge’s order and ordered Kalshi to allow trades from Michigan residents to go through.

However, it’s not clear if the CFTC’s order holds any force. No federal judge has gotten involved in this case, and no federal law expressly contradicts Michigan’s laws regarding sports betting. In practice, federal law supersedes state laws, but federal agency policies usually do not.

The CFTC’s attempt to get involved further increases the possibility that the Supreme Court will eventually decide for the nation how prediction markets are treated. For the time being, if operations continue for Kalshi in Michigan, it risks fines of $120,000 per day for the next 30 days.