Michigan enjoins Kalshi, and Kalshi asks why only Kalshi

What happened

Judge Rosemarie E. Aquilina of the Circuit Court for the 30th Judicial Circuit in Ingham County granted a preliminary injunction on Tuesday 1 September 2026 in Dana Nessel, Attorney General of the State of Michigan on behalf of the People of the State of Michigan and the Michigan Gaming Control Board v. KalshiEX LLC, No. 26-1087-CZ. The order converts a temporary restraining order first entered in June and extended since, and it stands until final judgment. The court found immediate and irreparable harm to Michigan and 'its most vulnerable citizens' from what it calls 'Kalshi's sports betting operation masquerading as an investment opportunity', and set out six grounds: that licensed Michigan gaming requires wagerers to be 21 while Kalshi accepts them at 18; that it 'takes advantage of serious mental health issues' without the protections the state's framework was designed to give; that it 'eludes the comprehensive patron protection mechanisms' of that framework; that non-compliance gives it 'a massive and unfair advantage over the entities that comply'; that it undercuts state funding for schools, compulsive gambling prevention, economic development and first responders; and that it deprives the City of Detroit of gaming taxes and the Tribes of revenue while ignoring their sovereignty. Five categories of conduct are enjoined for any person located in Michigan: offering, listing, matching, executing, clearing or settling any product constituting internet sports betting as defined by MCL 432.403(s); accepting deposits or fees for such contracts; advertising or soliciting them 'via websites, mobile apps, email, push notifications, social media, influencers, affiliates, or paid placements'; permitting account creation, funding or maintenance for the purpose of accessing them; and 'Designing, launching, or operating products that are functionally similar to internet sports betting, including but not limited to single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange betting, in-game betting, proposition bets, and straight bets'. Kalshi must use a third-party geolocation provider licensed by the Michigan Gaming Control Board and capable of meeting its Technical Bulletin No. 2024-03, and the $500,000 a day penalty attaches to that requirement alone, because a failure to geolocate would 'limit Plaintiffs ability to identify ill-gotten gains for the purpose of disgorgement'. Within three business days Kalshi must send the order and the state's counsel details to every futures commission merchant that makes its sports event contracts available, and it is then held harmless for what those FCMs do, 'because Kalshi does not control which FCM customers an FCM chooses to make sports event contracts available to, nor the platforms on which those sports event contracts are offered'. The department announced the order the next day; Attorney General Nessel said 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'. Michigan Advance reports that in a letter to the department on Friday 28 August, Kalshi's attorney Andrew Porter wrote that the company's position remains that its contracts fall under exclusive CFTC jurisdiction, that Michigan 'unlike states such as Nevada and Washington, is not seeking to favor some industry participants at the expense of others', that 'Polymarket, Robinhood and Coinbase all sought, and were denied, federal court orders that would have prevented Michigan from taking action against them in state court', and that Kalshi 'must reserve its right to move for dissolution of the Court's forthcoming preliminary injunction order in the event Michigan does not seek to address the purported harms inflicted by Kalshi's competitors'. The paper says the department did not answer its questions about whether it will bring similar suits. Kalshi's head of communications Elisabeth Diana, quoted from the earlier statement the company pointed the paper back to, said 'It's no surprise that we disagree with the state's decision and will fight it in court'.

Why it matters

The letter is the new thing here, and it changes what this line of cases is about. Every state action on this beat so far has been argued as a jurisdictional question: whether registering a venue with the CFTC displaces a state's gambling law. Kalshi still says it does. But in writing to Michigan it has added a second argument that is economic rather than legal, which is that exclusion is tolerable only if it is even. The claim is that the harm the court identified, eighteen to twenty year olds trading sports contracts, is 'inflicted equally by other market participants that presently are allowed to operate in Michigan', and that if the state does not go after Polymarket, Robinhood, Coinbase and Crypto.com then the injunction is not patron protection but a transfer of order flow. That is a competitive-parity complaint of exactly the shape the CFTC made to a federal court about CME three days later, from the opposite side of the table, and it is the first time a prediction market has put it in writing to a state. The order's own reasoning gives the argument something to bite on: the fourth head of harm is that non-compliance gives Kalshi 'a massive and unfair advantage over the entities that comply with Michigan's regulatory structure', which is a statement about competition rather than about consumers, and it is only true of Kalshi to the extent it is true of everyone unlicensed. The FCM passage matters for a different reason. A state court has drawn a line inside a federal derivatives structure, requiring the exchange to notify the intermediaries that carry its contracts and then declining to hold it liable for their conduct, because the exchange does not choose their customers. Every venue on this beat that has moved to an intermediated model, and Coinbase and Robinhood both distribute event contracts this way, now has a template for where a state order stops. And the geolocation term is the operational heart of it: this is the second state after Washington to price the geofence rather than the trading, which turns the question from whether the contracts are lawful into whether the venue can prove where its users are.

What is not settled

Nothing is decided. The injunction stands until final judgment and the case is back in state court after the remand, so the merits of the Lawful Sports Betting Act claim have not been tried. Whether the department will sue Polymarket, Robinhood, Coinbase or Crypto.com is unanswered, and the answer determines whether Kalshi's dissolution motion has anything behind it; Michigan Advance says the department did not respond to its questions, and no report read here has an answer either. Nor is it clear what a motion to dissolve on parity grounds would be founded on, since the order rests on the state's licensing statute rather than on any comparison between operators, and a court that agreed with Kalshi would be saying that a state must enforce against everyone at once or nobody. The relationship between this order and the certiorari petition New Jersey filed the following day is unresolved: if the Supreme Court takes the federal preemption question, every state injunction including this one is provisional. The order's own numbers are not explained. The $500,000 figure is stated without a method, and the disgorgement it is meant to preserve has not been quantified by anyone. And the desk cannot say from the documents read here how many states now have live civil actions against prediction market operators, which is HANDOFF 55's warning: the corpus holds New York, Minnesota, Washington, Michigan, Nevada, New Jersey and Baltimore and does not hold Wisconsin's three actions or the CFTC's own suits, so no sentence in this story begins with the word first.