Judge Orders Kalshi Shut Down in Michigan

Bettors in Michigan have a lot of options at their disposal. But after a judge ordered Kalshi shut down in the Great Lakes State, prediction markets aren’t among them.

Ingham County Judge Rosemarie Aquilina issued a temporary restraining order (TRO) against Kalshi, ordering the site to geofence Michigan until the case is decided. In Michigan, a TRO is valid for 14 days, but can be extended if circumstances warrant.

That means that Kalshi must block Michigan users until at least July 13, when court proceedings are expected to resume. At that point, Aquillina can either allow the order to expire, issue another TRO or extend the order further.

Kalshi has said that it will comply with the judge’s ruling. Aquillina had threatened fines of up to $120,000 per day that Michigan remained unblocked.

The injunction means that Kalshi is blocked in two major states. A third, Massachusetts, has an order against Kalshi, but the order is stayed pending further litigation.

Why Was Kalshi Shut Down in Michigan?

In March, Michigan attorney general Dana Nessel filed a lawsuit against Kalshi, alleging that the prediction market site skirted Michigan’s laws. Michigan has legal sports betting and iGaming, both of which which are governed by the Michigan Gaming Control Board.

Prediction markets have operated outside of those controls. That’s kept them separate from state tax laws, depriving states of revenue. Nessel further argued that has given Kalshi and other prediction markets an advantage over sportsbooks and iGaming operators, which are subject to Michigan’s rules.

One important difference was the age limits. Michigan law prevents sportsbooks and iGaming from offering action to anyone under 21. Kalshi accepts trades from people as young as 18, a violation that Aquillina noted in her ruling.

What Does the Order Require?

Under the terms of the TRO, Kalshi cannot do any business in Michigan. This bans the site from accepting wagers or advertising its platform in Michigan until at least July 13. It also cannot accept deposits or allow Michigan players to open accounts.

Prediction markets haven’t had to geofence until recently, and the Kalshi shut down requires a quick solution. In practice, Kalshi will use a third-party software to block Michigan users from accessing its site until the TRO expires. Given that potential fines could have reached $1.68 million after two weeks, a temporary geofence made more sense.

What Options Does Kalshi Have?

Kalshi already exhausted one of its main options before the decision. Prior to the ruling, Kalshi attempted to move the lawsuit to federal court, a strategy it has tried elsewhere. However, Nessel filed a motion to remand, which was granted.

Further, U.S. District Judge Paul Maloney ruled in a separate case involving Polymarket and Robinhood that federal rules on trades do not supersede state gambling laws. That case also related to Michigan law, locking Kalshi out of that option.

Per last month’s Supreme Court decision T.M. v. University of Maryland Medical System Corporation, Kalshi cannot attempt to move the case to federal court moving forward. It now must stay in Michigan state court, unless the case reaches the Supreme Court.

The next move in the case will come on July 13, when the TRO expires.