Kalshi Is Now Blocking Michigan Users — and Faces a Nevada Contempt Hearing on July 16
For the first time, prediction market litigation has crossed from the courtroom to actual platform access restrictions. A Michigan state court issued a temporary restraining order on June 29 requiring Kalshi to halt sports contracts until July 13 — with $120,000-per-day fines for non-compliance — and Kalshi began geofencing Michigan users on July 7. Separately, Nevada is seeking to hold Kalshi in contempt after investigators successfully purchased prohibited contracts eight times while physically in the state. Polymarket also filed its first independent federal lawsuit, against New Mexico.
The prediction-market litigation wave has produced its first concrete platform-access restrictions. On June 29, Ingham County Circuit Court Judge Rosemarie Aquilina signed a temporary restraining order obtained by Michigan Attorney General Dana Nessel, requiring KalshiEx to halt sports event contracts in the state until July 13, on penalty of $120,000 per day. Kalshi said it would comply while continuing to contest the underlying lawsuit, and on July 7 the platform began blocking Michigan users from its sports markets. It is the first case in the 2026 litigation wave where a court order has caused visible, on-the-ground changes to what prediction market users can access — moving from a fight over legal theory to a fight over who can use the product.
The Michigan TRO comes on top of the June 19 ruling by US District Judge Paul Maloney, who denied Polymarket and Robinhood a federal preliminary injunction on preemption grounds. That ruling — covered here when it happened — was a legal loss. The TRO is an operational one: Michigan users can still access non-sports Kalshi markets, but the state has effectively enforced a partial product block while the litigation continues. The $120,000 daily fine structure creates strong compliance pressure regardless of how the underlying case ultimately resolves. An appeal of the June 19 Maloney ruling is proceeding separately in the Sixth Circuit.
In Nevada, the situation is further along — and more troubled for Kalshi. The Nevada Gaming Control Board obtained a state-court preliminary injunction on May 18 requiring Kalshi to geofence sports, election, and entertainment event contracts from Nevada residents. The Nevada Supreme Court denied Kalshi's bid to pause that order. What followed matters: NGCB investigators testing the geofencing found that they could successfully purchase prohibited contracts on eight separate occasions across four days (May 28, 30, 31, and June 1) while physically located in Nevada. The alleged failure was attributed to Kalshi's geofencing solution — a homegrown, IP-address-based system built for roughly $190,000, which is notoriously unreliable because IP addresses do not reliably identify physical location. A full-day contempt hearing is scheduled for July 16, with a possible extension to July 31.
The Nevada contempt case raises a question the whole sector now has to answer: what does technically adequate geofencing look like, and who decides? IP-based geofencing is the industry standard starting point, but it can be circumvented by VPNs, mobile data roaming, and certain carrier configurations. More accurate location verification — GPS, cell-tower triangulation, device sensors — is technically feasible but adds friction to the user experience and raises its own privacy questions. How courts evaluate 'good faith compliance' will set the standard for every other state that obtains an injunction. If Kalshi is held in contempt and fined, the signal to the other litigation states is that IP-based blocking is insufficient and something more robust is required.
The third development of the week is Polymarket filing its own federal lawsuit in New Mexico on July 1, seeking a declaratory judgment that state law cannot preempt the Commodity Exchange Act and a preliminary injunction blocking New Mexico from taking enforcement action against it. This is notable because Polymarket has generally let the CFTC lead the legal fight in each state, with its own participation limited to supporting motions. New Mexico twice rejected Polymarket's requests to delay any enforcement until the Kalshi case resolved. The independent filing puts Polymarket directly in the litigation, alongside the existing CFTC suit, and is the first time the platform has brought its own preemption case without the agency as lead plaintiff. The litigation scoreboard has been updated to reflect Nevada as the tenth state in active litigation and the changed status in Michigan and New Mexico.
Operators mentioned in this article
Recent updates
Kalshi's Parlays Drive Back-to-Back $5B Days — and Hand Critics Their Strongest Argument
Kalshi traded a record $5.33 billion on November 7 and $5.36 billion on November 8, with multi-leg parlay-style 'combos' making up roughly 75% of both days' volume. Its 30-day volume topped $100 billion. But the parlay dominance cuts against the platform's legal defense: parlays are a quintessential sportsbook product, and the American Gaming Association has told the Second Circuit that parlays make up about two-thirds of Kalshi's volume and should be treated as sports bets. The implied house edge on 10-plus-leg combos is around 25%, undercutting the argument that these are neutral financial instruments rather than gambling.
Cruz Bill Would Require State or Tribal Approval for Sports Contracts — a Bipartisan Legislative Threat Emerges
Senator Ted Cruz, who chairs the Senate Commerce Committee, is preparing a bill that would bar federally regulated prediction markets from offering gambling-tied event contracts, including sports, unless a state or tribal government authorizes them. It would not ban the contracts nationwide but would require platforms to obtain approval jurisdiction by jurisdiction, resembling state-by-state sportsbook regulation. The proposal arrives as Democrats take control of both chambers after the midterms, creating a potential bipartisan reckoning: a Republican committee chair and a newly skeptical Democratic majority both eyeing restrictions on a sector that had relied on federal protection.
CFTC Tells Platforms to Stop Geofencing States — Directly Colliding With State Court Orders
The CFTC issued an interpretation on November 5 of its 'impartial access' core principle, telling regulated exchanges including Kalshi and Polymarket to drop state-by-state geographic blocks within 30 days or explain why they cannot. The demand collides head-on with existing state court orders that require the platforms to geofence: Washington ordered Kalshi to geofence in August, and Michigan ordered it to use licensed geolocation to block the state in September, with a $500,000 daily fine for violations. Chairman Michael Selig framed the interpretation as a uniformity requirement. The platforms are now caught between a federal demand to unblock states and state court orders to block them.