Michigan extends Kalshi sports ban; geofence due Aug. 12

On Monday, Judge Rosemarie Aquilina extended a temporary restraining order that bars Kalshi from offering sports-event contracts to users in Michigan. The order requires Kalshi to implement geofencing to block Michigan access by Aug. 12 and imposes fines of $500,000 per day for each day of noncompliance beginning Aug. 13. The judge did not set an end date for the restraining order.

The extension follows a June 29 order that temporarily halted Kalshi’s sports contracts in Michigan and initially threatened $120,000-per-day fines if geofencing was not adopted. Kalshi obtained an emergency pause of that earlier geofencing requirement while the court reviewed the company’s legal and technical arguments.

Kalshi currently prevents Michigan participation by checking the registration address users provide at sign-up. Company attorneys argued in court that integrating geofencing is technically complex and that Kalshi is coordinating with geolocation provider GeoComply, but they were unable to give a firm completion date. The firm also argued that the Commodity Exchange Act preempts state gambling rules for products regulated as commodity derivatives.

Aquilina expressed doubt about the preemption argument and told the court, “You are not dealing with commodities but with gambling, which has traditionally been denied by the states.” She added, “What you’re doing is defining it in a way that works for you, but not for Michigan.” The judge rejected the claim that federal commodities law shields Kalshi in this case.

A GeoComply executive who testified estimated that geofencing implementations can take one to two weeks, depending on a customer’s technical preparations. The state told the court it believed Kalshi had a financial motive to delay deployment, citing elevated trading volumes during the recent FIFA World Cup.

If Kalshi does not meet the Aug. 12 deadline and fails to obtain a court extension, fines of $500,000 per day will begin on Aug. 13. The parties are scheduled to return to court next Monday for a status update.

Kalshi operates an exchange that sells event-based contracts allowing users to take positions on outcomes, including sports events. The company maintains its products fall under federal commodities regulation, while state officials say the sports contracts function as wagers subject to state oversight or prohibition.