Michigan wants Kalshi held in contempt over sports-contract ads after its court ban

Michigan is seeking to hold Kalshi in civil contempt over allegations that sports-contract promotions continued reaching residents after a court prohibited both the products and their marketing. According to defirate.com, Attorney General Dana Nessel’s office filed the motion on Sept. 29. Ingham County Circuit Judge Rosemarie Aquilina has set a Nov. 24 hearing for Kalshi to respond. The Sept. 1 preliminary injunction allows fines of $500,000 a day for noncompliance; the contempt request does not establish a violation or mean penalties have been imposed.

Michigan’s case turns on marketing

The state’s evidence includes promotional emails and advertising rather than simply access to trading. According to State Affairs reporting cited by defirate.com, a Michigan Gaming Control Board (MGCB) regulation specialist continued receiving sports-betting emails through her Michigan-based Kalshi account after the prohibition took effect. Another account holder received targeted promotions for upcoming NFL games. A resident who said they had never downloaded a prediction-market app or opened an account reported numerous Kalshi advertisements after July 1. The filing included a Sept. 20 YouTube advertisement promoting trading on an upcoming Los Angeles Rams game.

The injunction bars advertising, promotion and marketing of the covered products to people in Michigan or using a Michigan address. Its reach includes websites, mobile apps, emails, push notifications, social media, influencers, affiliates and paid placements. Kalshi must use an MGCB-licensed third-party geolocation provider that meets the board’s technical standards. The order also prohibits circumvention through accounts opened elsewhere and products resembling single-game wagers, parlays, in-game bets or player props. It extended an earlier temporary restraining order and raised the potential daily penalty from $120,000 to $500,000, according to defirate.com.

Michigan’s enforcement also reaches distributors. Coinbase Financial Markets agreed to cease offering sports-event contracts to Michigan users by midnight Saturday, following a similar agreement by Robinhood. Kalshi was required to notify platforms using its exchange, including those two companies, within three business days of the September ruling. Coinbase had unsuccessfully sought a preliminary injunction against Michigan regulators in August. MGCB Executive Director Henry Williams attributed the companies’ withdrawals to the significant legal consequences of continuing to offer the products, defirate.com reported.

Compliance disputes meet a divided legal landscape

Nevada offers a related dispute over trading access. Its Gaming Control Board sought contempt proceedings in June after investigators said they could still buy prohibited contracts. Kalshi subsequently agreed to implement GeoComply’s location-verification technology by August 12, eliminating the need for a scheduled contempt hearing. But in an August 14 filing, regulators said investigators completed nine trades through Kalshi’s mobile app from inside Nevada the day after that deadline. The board requested $120,000 in daily penalties and legal fees, according to defirate.com.

Kalshi argued that investigators misrepresented residence information and bypassed restrictions with an older app version, while maintaining that its Nevada geofencing exceeded its obligations. The board rejected those accusations as baseless and said the company missed its agreed deadline. The distinction from Michigan matters: Nevada’s allegations concern access and completed transactions, while Michigan’s concern continued solicitation. Blocking trades does not necessarily satisfy an independent restriction on advertising.

Underlying both disputes is Kalshi’s argument that the Commodity Exchange Act places its contracts exclusively under the Commodity Futures Trading Commission (CFTC), preempting state gambling restrictions. States contend that sports contracts are wagers subject to sportsbook licensing, tax and consumer-protection requirements. According to defirate.com, the Third Circuit supported Kalshi’s preemption position in New Jersey; the Ninth Circuit found Kalshi had not demonstrated a likelihood that federal law displaced Nevada’s gaming requirements; and the Sixth Circuit sided with Ohio and Tennessee regulators. Kalshi requested rehearing in the Ninth and Sixth Circuits. Its Oct. 9 Sixth Circuit petition also invokes proposed CFTC rulemaking that would expressly include sports and other event contracts in the federal definition of a swap. Neither the rehearing requests nor the unfinished rulemaking reverses those decisions.

The potential Supreme Court route comes through other litigation, not Michigan’s contempt motion. New Jersey has sought review of the Third Circuit decision, while Robinhood and Crypto.com’s North American Derivatives Exchange have separately requested review of Nevada-related rulings. The justices have not agreed to hear the cases. Attorneys general from 39 states and the District of Columbia support New Jersey’s petition; the American Gaming Association, the NFL, former CFTC Chairman Gary Gensler and former Sen. Christopher Dodd have also filed briefs urging review, according to defirate.com.

What it means for prediction markets

• Nov. 24 is the next Michigan hearing to watch. Contempt remains an allegation, and the authorized $500,000 daily fine should not be confused with an imposed penalty.
• Compliance extends beyond transaction blocking. Michigan’s marketing restrictions create obligations distinct from the trading-access issues alleged in Nevada.
• Distribution can narrow across multiple platforms. The Coinbase Financial Markets and Robinhood agreements show that state enforcement can affect access beyond Kalshi’s own interface.
• National jurisdiction remains unsettled. Rehearing petitions, proposed CFTC rules and Supreme Court review requests are separate procedural developments—not a final resolution of federal versus state authority.