Ingham County Circuit Court Judge Rosemarie E. Aquilina granted the order following a lawsuit filed in March 2026 by Michigan Attorney General Dana Nessel and the Michigan Gaming Control Board. The court requires Kalshi to deploy third-party geofencing tools to cut off Michigan residents from accessing sports contracts on its platform. It also bars the company from promoting, advertising, accepting deposits related to, and facilitating sports event contracts within the state. The order expires July 13, 2026.

The Core Legal Fight

The dispute turns on a single classification question: are Kalshi's contracts commodity swaps regulated exclusively by the federal Commodity Futures Trading Commission, or are they sports wagers subject to state gambling law? Kalshi, which operates as a CFTC-designated contract market, argues that federal law under the Commodity Exchange Act preempts all state gaming restrictions. Michigan counters that Kalshi is running unlicensed sports betting under the state's Lawful Sports Betting Act. Judge Aquilina sided with the state on urgency, citing concerns about harm to young users, lost tribal gaming tax revenue, an unfair advantage over Michigan's licensed sports betting operators, and a reduction in state funding for schools, gambling prevention, economic development, and first responders.

"We disagree with the state's decision and will fight it in court," said Kalshi representative Elisabeth Diana. "Kalshi is subject to exclusive federal jurisdiction."

The case reached state court after Kalshi attempted to move it to federal court and the Western District of Michigan sent it back.

Scale of the Platform and the Industry

Kalshi is not a small operator. The company processes roughly $2.7 billion in weekly trades across more than 350,000 active markets and holds approximately 53% of global prediction market volume, according to DefiRate. Sports contracts account for more than 85% of all activity on the platform. During a four-day window around March Madness in March 2026, Kalshi generated $25 million in fee revenue alone. The company is currently valued at $22 billion, according to Fortune and NPR Illinois.

Its nearest competitor, Polymarket, holds approximately $2.1 billion in weekly volume and carries a valuation of around $20 billion. Together the two platforms form a dominant duopoly whose combined scale makes the outcome of ongoing regulatory battles consequential well beyond any single state or country.

The broader prediction market industry has grown sharply. Combined monthly global volume across major platforms climbed from under $5 billion in mid-2025 to roughly $24 billion by April 2026, a roughly fivefold increase in nine months. Industry-wide volume is projected to reach around $200 billion for full-year 2026, according to Fortune.

Michigan Is One of 11 States

Michigan joins a widening enforcement front. Eleven states have filed lawsuits or issued cease-and-desist orders against prediction market operators, according to MultiState. Massachusetts secured a preliminary injunction in January 2026. Nevada issued a restraining order in March and extended it ahead of a longer-term injunction. Arizona went further, filing 20 misdemeanor criminal charges against Kalshi. Wisconsin's attorney general filed lawsuits in April 2026 alleging illegal gambling. Illinois enacted a $15 million licensing fee and sports wagering tax regime for prediction market operators in June 2026, prompting Kalshi to file a federal lawsuit against the state on June 26.

States argue they have collectively lost more than $600 million in sports betting tax revenue to prediction market platforms operating outside state licensing frameworks.

The CFTC, under Chairman Michael Selig, has pushed back aggressively. The agency has sued five states (Arizona, Connecticut, Illinois, New York, and Wisconsin) to assert federal jurisdiction, obtained a preliminary injunction blocking Arizona's criminal prosecution of CFTC-registered platforms, and filed an amicus brief in an Ohio case defending exclusive federal authority. "The CFTC will not allow overzealous state governments to undermine the agency's longstanding authority over these markets," Selig said.

Federal appellate courts are split. The Third Circuit ruled in April 2026 that sports event contracts are swaps under federal law and that state gaming restrictions are preempted. A Ninth Circuit panel hearing Nevada's appeal appeared to lean toward the state. Cases remain active in the Fourth and Sixth Circuits. Legal experts widely expect the issue to reach the Supreme Court by 2027 if the circuit split materialises.

Gaming attorney Daniel Wallach has observed that prediction market platforms appear to be deliberately pursuing a multi-circuit litigation strategy: "If you are the prediction markets, the goal is to create litigation in as many circuits as possible to expand the runway." The judicial disagreement is sharp on both sides. Third Circuit Judge Jane Roth wrote in dissent: "If it looks like gambling, talks like gambling, and calls itself gambling, it's gambling." Austin Evers, a partner at Freshfields, captured the broader dynamic driving the US dispute: "This is a classic case of old tools being applied to cutting-edge technologies."

What This Means Outside the United States

The jurisdictional fight in the US is not an isolated domestic matter. It is playing out simultaneously in other major markets and will likely shape regulatory approaches globally.

In India, the government moved quickly. India's Ministry of Electronics and Information Technology (MeitY) ordered internet service providers to block rival platform Polymarket in May 2026 under the country's Promotion and Regulation of Online Gaming Act 2025, which classifies prediction market activity as prohibited online money gaming. A blocking order targeting Kalshi was reportedly in process as of May 22, 2026. MeitY also issued an advisory on April 25, 2026, specifically warning VPN providers about circumvention attempts, signalling that the government is actively monitoring and closing workarounds that might otherwise allow users to access blocked platforms. For developers and investors in South Asia, this effectively closes off one of the world's largest potential user bases through mainstream product channels.

India's broader regulatory posture compounds the challenge. The government already imposes a 30% flat tax on crypto gains and a 1% tax deducted at source on transactions. That regime has pushed numerous crypto startups to relocate to Dubai and Singapore. The prediction market crackdown fits this larger pattern rather than representing an isolated reaction.

South Africa presents a different but equally challenging picture. Legal analysis from ENS Africa identifies three overlapping frameworks that prediction market products could fall under: the Financial Advisory and Intermediary Services Act and FSCA conduct standards; the Financial Markets Act, where event-contingent contracts may qualify as derivatives; and the National Gambling Act. No single regulator has clear jurisdiction, and no dedicated prediction market regime exists. One potentially significant nuance is that Section 3(2) of the Financial Markets Act may shield FMA-regulated activities from gambling law, but only if the product is first classified under the FMA. That initial classification step is far from guaranteed, and its outcome will determine which regulatory framework applies. The Michigan pattern, where a federally licensed platform still faces state-level enforcement, is a direct warning for African builders: registration with one financial authority will not automatically provide legal cover if a product can simultaneously be characterised as gambling or an unlicensed financial product under a separate framework.

The US, India, and South Africa are not outliers. The United Kingdom classifies prediction market contracts as gambling. Singapore banned Polymarket in 2025. Australia prohibits access to prediction market platforms. Taiwan has investigated users for political betting. Across jurisdictions, regulators are converging on similar questions about product classification, even when they reach different answers.

The Michigan TRO expires on July 13, 2026, and further court proceedings are expected at that point. The deeper contest over whether prediction market contracts are derivatives or gambling will continue across multiple courts, multiple countries, and, most likely, multiple years.