Michigan judge says Kalshi cannot proceed with event contracts

• A judge in Michigan has decided that Kalshi needs to stop its event contract offer for the time being as the case is decided
• Kalshi has disagreed with the ruling, arguing that it is regulated under federal law and does not offer gambling products specifically
• The case will carry on and will be ultimately decided in the courts, with precedent existing for both outcomes - either allowing Kalshi to continue operating, and blocking it

A Michigan judge has sided with the state’s Attorney General, Dana Nessel, in a lawsuit against Kalshi, a prediction market platform that accepts "trades" not "bets," on various world and sports outcomes. Nessel is not the only AG to have gone after the platform.

Judge sides with state and AG over Kalshi - orders platform to suspend markets temporarily

County Circuit Judge Rosemary Aquilina has issued a temporary restraining order against Kalshi, ordering the company to stop accepting action in the Great Lakes State, handing an early win to Nessel, who filed a lawsuit against the company in March, arguing that prediction markets are used to skirt the jurisdiction’s specific sports betting and gambling laws.

Effective from Monday, June 29, Kalshi is not allowed to accept any new trades on its platform while the case continues in the courts.

The decision comes after Kalshi tried to originally move the case to a federal court, with US District Judge Paul Maloney ruling against the request on June 25, and arguing that the federal framework does not preempt Michigan’s gambling laws.

The Commodity Futures and Trading Commission (CFTC), which regulates prediction market platforms, has in fact sought to sue jurisdictions that it similarly argued were trying to preempt federal law, arguing the exact opposite of what Maloney wrote.

"Michigan and its most vulnerable citizens are suffering and will continue to suffer immediate and irreparable harm absent relief from being exploited by Kalshi's sports betting operation masquerading as an investment opportunity," the judge explained in her decision.

Kalshi has promptly complied with the decision, but is pushing back all the same, determined to continue its litigation against the state. The platform has repeatedly said that it does not offer sports bets but allows users to trade on commodities instead.

Kalshi’s Head of Communications, Elisabeth Diana, spoke to the Free Press, a media publication covering the story, and said:

"It's no surprise that we disagree with the state's decision and will fight it in court. We won’t be bullied by interests that care more about protecting their monopolies than their consumers. In the meantime, we're implementing restrictions."

Nessel welcomes the outcome, but the legal battle is set to continue nevertheless

Naturally, the decision has landed well with Nessel, who argued that this was the right step forward for addressing how these companies operate.

"We remain committed to enforcing a level playing field for all gambling platforms in Michigan and ensuring that companies cannot evade accountability or exploit consumers under the guise of a prediction market," the attorney general’s office explained in a statement.

Kalshi and the AG’s office will continue to clash over the local interpretation of the product, with the courts left to decide whether the platform may operate in its current form. So far, Nessel’s efforts are paying off.

In the meantime, Minnesota has even outright banned prediction markets.

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