Kalshi’s sports contracts will stay off-limits in Michigan after a judge extended last month’s restraining order. The ruling means the prediction market must geofence the state by August 12 or face a fine of $500,000 for every day it fails to comply. Judge Rosemarie Aquilina of Michigan’s 30th Circuit Court first ruled on June 29 that Kalshi’s sports event contracts amounted to illegal sports betting. At that time, the company was told to block Michigan users within two weeks or pay $120,000 daily until it did. An emergency motion later paused that requirement while Kalshi argued that geofencing would be too costly and might conflict with Commodity Futures Trading Commission rules. For now, Kalshi relies on sign‑up information to block users with Michigan addresses, but this system leaves gaps. Visitors from other states can still trade while inside Michigan, and Michigan residents outside the state may be unable to access contracts. Judge disagrees with Kalshi’s federal argument Kalshi’s lawyer, Will Havemann, told Judge Rosemarie Aquilina that the platform should not fall under Michigan’s gambling laws. He argued that Congress, through the Commodity Exchange Act, had already made clear that state gambling rules were preempted when it came to designated contract markets. Havemann pointed to early attempts to regulate grain futures as gambling, saying Congress knew it was overriding state laws when it handed authority to a federal agency in 1974. The judge was not persuaded. “But you aren’t really talking about commodities, interest rates, things like that, but gambling, which has traditionally been denied by the states,” she said. “What you’re doing is defining it in a way that works for you, but not for Michigan.” Despite Kalshi’s reliance on federal law, Michigan has joined Nevada as one of the few states to enforce a ban on its sports event contracts. In Nevada, Kalshi first tried address‑based blocking before switching to its own geolocation system, which regulators there say does not work properly. Kalshi and state argue geofencing Kalshi’s lawyers told the court that the company is preparing for geofencing if it becomes mandatory. Havemann said Kalshi has been working with GeoComply and stressed that efforts are underway, though he admitted there is no clear timeline yet. “I do really want to emphasize that we’ve gone to great lengths to comply,” he said. “But we are doing our best, including with respect to GPS and geofencing, and the work is underway.” Andrew Porter added that federal rules require extensive testing before Kalshi can roll out geofencing, noting that GeoComply has already given the company access to a sandbox environment. The state pushed back. Assistant Attorney General Lauren Fitzsimons argued that Kalshi had a financial reason to delay, pointing to the company’s recent trading volume during the World Cup. She said Kalshi had made more than $10 million in daily fees, far more than the fines it would face for noncompliance. “Kalshi is incentivized to drag this out and avoid geofencing for as long as possible, because it is financially beneficial to do so,” Fitzsimons told the court. Michigan also called GeoComply executive Chad Kornett to testify. Kornett explained that IP‑based blocking is unreliable because web traffic can show multiple locations, especially when VPNs are used. He said GPS‑based geofencing is more accurate and can usually be implemented within one to two weeks, depending on the customer. Kornett confirmed that GeoComply and Kalshi’s engineering teams have been working closely in recent days, describing the collaboration as positive. Kalshi given 30 days and required to give updates Aquilina made clear that the temporary restraining order blocking Kalshi’s sports contracts would remain in place. “This court has jurisdiction on behalf of Michigan,” she said. “Gambling regulation is within the realm of Michigan. In regards to the TRO, it is going to continue.” She added that Kalshi could follow both state and federal law, and that the burden on the company did not outweigh the public interest. The judge ruled that Kalshi has 30 days to move forward with geofencing, stressing that progress must be steady throughout the period rather than delayed until the last moment. If Kalshi fails to act, fines will rise sharply to $500,000 per day. The deadline means geofencing must be in place by August 12, with August 13 as the first full day of enforcement. “I’m going to give Kalshi 30 days and I ask Kalshi to keep us updated,” Aquilina said. She warned that waiting until the final days would trigger sanctions. While she acknowledged the complexity of the process, she insisted that protections for the public must come first. No expiration date was set for the extended restraining order, and both sides are scheduled to return to court Monday for a status update. Source: InGame

I