The legal beat around prediction markets continues.
Michigan state officials have escalated their fight against Kalshi by asking a circuit court judge to hold the platform in civil contempt. Attorney General Dana Nessel’s office filed the motion on September 29, alleging that marketing for sports event contracts kept reaching residents after a September 1 preliminary injunction barred both the contracts and any related promotions. Judge Rosemarie Aquilina scheduled a show-cause hearing for November 24 at 3:30 p.m., giving Kalshi a chance to explain its compliance efforts before potential daily fines of $500,000 could apply.
The request focuses on promotional activity rather than completed trades. Gaming lawyer Daniel Wallach highlighted the filing on X, noting the hearing date and the underlying injunction that requires geofencing. Reporter Emma Kinery separately shared court documents describing targeted ads that continued after the order took effect.
Kalshi has repeatedly maintained that the Commodity Futures Trading Commission has exclusive federal oversight of its event contracts. The company previously stated it would implement restrictions while challenging state actions in court. Meanwhile, the contempt motion tests whether those steps fully stopped marketing that the September 1 order specifically prohibited.
Motion Cites Targeted Emails And Video Ads Reaching Residents
The filing includes evidence of multiple outreach attempts after the injunction. A Michigan Gaming Control Board regulation specialist continued receiving emails promoting sports-related trading through a state-based Kalshi account. That’s obviously going to be noticed. Another account holder received similar targeted messages encouraging activity on upcoming NFL games.
A separate resident who never created an account or downloaded the app reported receiving numerous Kalshi advertisements after July 1. The motion also includes a September 20 YouTube ad promoting trades on an upcoming Los Angeles Rams game under the label “Kalshi: Trade Football and More.” These examples sit at the center of the allegation that promotional channels remained active despite the court’s clear language.
The September 1 order expressly barred advertising, promoting, or marketing the covered products to people in the state or using a state address. That restriction covers websites, mobile apps, email, push notifications, social media, influencers, affiliates, and paid placements. As a result, continued delivery of such material forms the core of the contempt claim even if geofencing blocked actual contract execution.
Preliminary Injunction Sets Strict Geofencing And Marketing Rules
Judge Aquilina issued the preliminary injunction on September 1, following temporary restraining orders in June and an extension into August. The order requires Kalshi to use a third-party geolocation provider licensed by the Michigan Gaming Control Board and meeting the board’s technical standards. It also prohibits creating accounts, funding them, or using workarounds that would let users access sports products from outside the state.
The ban covers products “functionally similar” to internet sports betting, including moneyline contracts, parlays, in-game markets, and proposition-style contracts. The judge raised the potential fine for geolocation noncompliance to $500,000 per day, up from $120,000 under the temporary order. Within three business days, Kalshi had to notify other platforms that process contracts on its exchange, including those offered through Robinhood and Coinbase.
Attorney General Nessel said in a September 2 statement that the order further protects residents from unlicensed practices. She noted that her office would continue defending the state’s gaming laws, which she asserts route regulated revenue back into communities. The court order itself observed that residents faced immediate and irreparable harm from what it described as a sports betting operation presented as an investment opportunity.
Kalshi must still appear at the November 24 hearing to address the marketing allegations. The contempt request does not itself impose penalties; it asks the judge to determine whether violations occurred and, if so, what sanctions follow. Consequently, the outcome will clarify what “compliance” requires while broader federal appeals remain unresolved.
Related Platform Agreements And Ongoing Federal Appeals
Coinbase Financial Markets agreed to stop offering new sports-related event contracts to residents by midnight on October 10 and to close remaining open positions by the same deadline. Robinhood Derivatives had already made a comparable voluntary commitment. Michigan Gaming Control Board Executive Director Henry Williams stated that operators are stepping back because they face significant legal consequences for continuing the activity.
These agreements sit alongside the injunction against Kalshi and do not resolve the underlying dispute over whether state gaming rules can apply to CFTC-registered event contracts. Federal appeals courts have split: the Third Circuit largely sided with Kalshi in a New Jersey matter, while the Ninth Circuit ruled against the company in a Nevada case and the Sixth Circuit favored regulators in proceedings involving Ohio and Tennessee. Kalshi has sought rehearings in the latter two circuits.
Meanwhile, petitions seeking U.S. Supreme Court review from the New Jersey and Nevada cases remain pending. Attorneys general from 39 states and the District of Columbia filed a brief supporting New Jersey’s petition, and the American Gaming Association, the NFL, former CFTC Chairman Gary Gensler, and former Senator Christopher Dodd also filed briefs. The current contempt motion adds another data point on enforcement while those larger legal questions stay open.
References
- Michigan Seeks Kalshi Contempt Over Sports Ads – DeFi Rate
- AG Nessel Secures Second Order Halting Unlawful Kalshi Sports Wagers – Michigan Attorney General
- Michigan Judge Blocks Kalshi From Allowing Residents To Place Sports Bets – Reuters
- Kalshi Sports Contracts Remain Banned In Michigan With Preliminary Injunction – Legal Sports Report
- Kalshi Faces $500K Daily Fines If It Doesn’t Block Michigan – SBC Americas
- Order Granting Preliminary Injunction – Ingham County Circuit Court
- Daniel Wallach post on the contempt motion and hearing – X
- Emma Kinery post on court documents alleging continued ads – X
- Kalshi sports wagers halted – WNEM TV5 on YouTube
- Michigan: Coinbase Halts Sports-Event Contracts In Settlement – CDC Gaming
- Mich. Asks Judge To Hold Kalshi In Contempt – State Affairs
