Michigan Court Blocks Kalshi Event Contracts as Supreme Court Prediction Market Fight Looms

Michigan Court Blocks Kalshi Event Contracts as Supreme Court Prediction Market Fight Looms

Michigan state authorities have secured a preliminary injunction against Kalshi, blocking the prediction markets platform from offering event contracts to residents in a ruling that escalates an ongoing jurisdictional battle now heading toward the US Supreme Court.

Michigan Attorney General Dana Nessel announced that the Circuit Court for the 30th Judicial Circuit in Ingham County approved the order, which bars Kalshi from making its event contracts available to Michigan residents and carries the threat of fines of up to 500,000 USD per day for violations. The state characterized the platform’s sports-related contracts as sports betting masquerading as an investment opportunity.

“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,” Nessel said in a statement.

The injunction is the second major order against Kalshi in Michigan this year. Nessel filed the lawsuit against the platform in March, alleging that its sports event contracts violate state gambling law. That claim mirrors legal challenges brought by authorities in several other states against Kalshi and its rival Polymarket, all of which turn on the same unresolved question: who regulates prediction markets, federal regulators or the states?

The June order that preceded the injunction produced one of the most unusual standoffs in the sector. After a Michigan court issued a temporary restraining order blocking Kalshi’s sports contracts, the Commodity Futures Trading Commission instructed the company not to comply with the state order and to continue operating. Kalshi itself described the situation as an impossible position, caught between a federal regulator demanding it keep serving Michigan users and a state court demanding it stop.

A Kalshi spokesperson referred to the company’s earlier statement on the June order, saying the firm disagreed with Michigan’s decision and would fight it in court. The spokesperson added that Kalshi is currently complying with the restrictions imposed by the court.

The Michigan ruling landed on the same day that officials in New Jersey filed a petition for a writ of certiorari asking the US Supreme Court to review the state’s case against Kalshi. If the justices agree to hear the matter, the case could finally resolve the competing legal theories over whether the CFTC holds exclusive jurisdiction over prediction markets or whether individual states retain the power to ban and regulate them as they see fit.

Legal observers believe Supreme Court involvement is a matter of when, not if. Melinda Roth, a visiting professor of practice at New England Law in Boston, said it would be reasonable for the Supreme Court to take up the dispute, though the justices may also choose to wait for cases to be decided on their merits rather than on procedural questions such as preliminary injunctions.

“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 said.

If the court does weigh in, Roth said, the decision would likely determine whether sports event contracts fall under federal CFTC regulation or whether states hold the right to ban them. She cautioned that Congress could also act first, either before or after a Supreme Court review, complicating any single ruling’s finality.

Lawmakers have already begun moving in that direction. In March, Senators Adam Schiff and John Curtis introduced bipartisan legislation that would prohibit CFTC-registered platforms from listing any event contract that resembles a sports bet or casino-style game, referring jurisdiction over such offerings to state authorities. The bill followed separate proposals targeting the use of insider information on event contracts by customers of Kalshi and Polymarket.

For now, the practical burden falls on the platforms. Michigan’s injunction carries one of the stiffest financial penalties yet imposed in the state-level crackdowns, and it applies to a company already navigating contradictory directives from federal and state authorities. Kalshi has said it will fight the decision while complying with the court’s restrictions in the meantime.

The stakes extend well beyond one company. Prediction markets have grown into a multibillion-dollar segment, with Kalshi and Polymarket attracting institutional investment and mainstream attention. A Supreme Court ruling on jurisdiction would set the ground rules for the entire industry, determining whether event contracts trade under a single federal framework or a patchwork of state-by-state rules resembling the regulated sports betting industry.

As of Thursday, Kalshi continues to operate in states that have not moved against it, while Michigan residents are blocked from accessing its event contracts. The next milestones are the Supreme Court’s decision on whether to grant New Jersey’s petition and any potential congressional action on the Schiff-Curtis bill, either of which could reshape the regulatory map for prediction markets in the United States.