Michigan has become the second US state to secure a court order against prediction platform Kalshi, forcing the operator to geofence its offerings while a legal dispute plays out. The ruling raises fresh questions about who actually gets to regulate these platforms, and whether federal or state authority takes precedence.

The Court’s Position

Ingham County Circuit Court Judge Rosemarie Aquilina issued a temporary restraining order that will run until July 13, 2026. Kalshi now faces potential daily penalties of $120,000 for non-compliance, though the company has indicated it will appeal.

Aquilina’s reasoning was pretty straightforward: prediction markets are simply wagering dressed up as investment products. The court highlighted concerns that Kalshi accepts 18-year-old customers while traditional sportsbooks require customers to be 21. Then there’s the matter of insufficient harm prevention mechanisms and potential unfair competition with tribal gaming operators who contribute tax revenue to Michigan’s community services.

A Growing Pattern

Nevada previously forced Kalshi to restrict its offerings after a state court upheld similar geofencing requirements in April. Both rulings reflect mounting state-level resistance to prediction markets, despite claims from the platforms themselves that they operate under federal oversight.

Kalshi maintains that the US Commodity Futures Trading Commission (CFTC) holds sole regulatory authority, positioning these offerings as financial instruments rather than gambling products. The company has committed to complying with Michigan’s order while pursuing an appeal.

Federal Intervention on the Horizon

The CFTC has been notably active in protecting prediction market operators, even filing lawsuits against states attempting stricter regulation. But the practical similarities to sports betting have generated significant pushback from state regulators concerned about consumer protection and tax revenue.

With conflicting rulings emerging across different jurisdictions and federal authority being challenged at the state level, many legal observers believe this is heading toward a Supreme Court decision. The question of whether prediction markets fall under federal financial regulation or state gambling laws remains genuinely unresolved. Both sides are digging in for a protracted fight.

What the team thinks

Carl Mitchell says:

This regulatory ping-pong between states and federal authorities is exactly the kind of legal messiness that stifles innovation in the UK’s favour, and Baz raises a crucial point about jurisdictional clarity that the industry desperately needs to address. What’s missing from this analysis is how these state-level blocks might actually push Kalshi and similar platforms to strengthen their compliance infrastructure, which could set a better precedent for legitimate prediction market operators down the line. The real story here isn’t just about one platform getting blocked, it’s about whether the US can eventually get its regulatory house in order before other jurisdictions like Europe establish themselves as the go-to market for prediction products.