Kalshi barred in Michigan; Polymarket sues New Mexico

A Michigan judge granted a temporary restraining order requiring Kalshi to stop offering sports-event contracts to users located in the state and to comply with geolocation rules. The order, in a lawsuit brought by Michigan Attorney General Dana Nessel, warned Kalshi it could face daily fines for noncompliance. Michigan is the third state to obtain such restraints after earlier actions in Nevada and Massachusetts.

Nevada’s Supreme Court denied Kalshi’s emergency request for a stay pending appeal. A hearing is scheduled for July 16 to address whether Kalshi failed to geofence Nevada after a prior preliminary injunction and whether the company should be held in contempt for allegedly violating that order. The hearing will consider the company’s efforts to restrict access to users inside the state and enforcement of the earlier injunction.

Polymarket filed a federal lawsuit in New Mexico against Attorney General Raúl Torrez and state gaming officials, saying the state’s suit against Kalshi and refusal to delay enforcement created an immediate threat to Polymarket’s operations. The complaint asks the court to protect Polymarket from enforcement actions based on New Mexico’s position that prediction market contracts constitute illegal gambling.

Kalshi has pursued multiple legal challenges. The exchange sued the Ohio Casino Control Commission in state court to block administrative proceedings that seek a $5 million civil penalty for offering unlicensed sports betting. Kalshi previously failed to secure a preliminary injunction in Ohio, and the Sixth Circuit denied an emergency request for relief. In Massachusetts, the attorney general was allowed to file an amended complaint that adds claims about Kalshi’s marketing and platform access by users under 21, while maintaining allegations that the platform offers illegal sports wagering.

Kalshi and Polymarket also appeared in federal court in Minnesota to seek a block on a new state law that would ban prediction market platforms before it takes effect Aug. 1. U.S. District Judge Katherine Menendez questioned whether contracts tied to sports events differ meaningfully from traditional sports wagers and described the challenge of showing a clear legal distinction. She took the request for a preliminary injunction under advisement.

In Illinois, a temporary restraining order hearing was canceled after the parties agreed to reassign the case to the same judge handling related federal matters. Illinois agreed not to take enforcement action while Kalshi’s preliminary injunction motion is pending.

Lawmakers and regulators are expanding oversight. A group of bipartisan House members introduced the No Profiting from Public Service Act, which would bar federal public officials from trading stocks or using prediction markets to wager on government or political outcomes. The sponsors are Representatives Kristen McDonald Rivet, Kevin Kiley, Greg Landsman and Eugene Vindman.

At the state level, North Carolina lawmakers approved a budget report that includes a 6% tax on prediction market revenue; the measure awaits formal enrollment before being presented to the governor. New Jersey committees advanced companion bills to impose a 9% surtax on prediction market revenue; those bills were amended to remove proposals to create a regulatory framework and to drop bans on certain contracts.

Market-integrity concerns surfaced after a spike in trading activity on Kalshi coincided with a rise in a song’s placement on U.S. streaming charts, prompting removal of more than 500,000 fake streams. The Coalition for Prediction Markets alleged that the American Gaming Association coordinated with state regulators and provided template language that appeared in a Maryland filing criticizing prediction markets. Kalshi launched a public messaging effort called Kalshi Truth to respond to criticism about its sports-event contracts.

Traditional exchanges are also seeking event-based products. Cboe Global Markets has filed with the SEC to offer binary options tied to corporate performance metrics, which would let investors take yes-or-no positions on company KPIs through securities accounts.

The litigation may reach the U.S. Supreme Court: Justice Samuel Alito gave New Jersey until Aug. 4 to file a petition challenging a Third Circuit ruling on whether the Commodity Exchange Act preempts state gambling laws that regulate sports-event contracts.