Kalshi does not yet have to geofence Michigan, despite an initial temporary restraining order requiring it to do so, after a court amended that order to investigate the “viability” of the prediction market geofencing.
Until then, Kalshi will continue to use users’ registered addresses to block sports contracts in Michigan, making the contracts unavailable to those whose address shows them living in the state.
On June 29, the 30th Circuit Court, a state court in Michigan, issued a temporary restraining order banning Kalshi’s sports contracts in the state for two weeks. Kalshi is seeking an appeal, but the order is still in effect while it awaits a decision.
The initial temporary restraining order would have required Kalshi to pay a fine of $120,000 for every day that it does not geofence Michigan. It required Kalshi to use a third-party geolocation provider approved by the Michigan Gaming Control Board. Kalshi had previously used an in-house geolocation solution in Nevada, but the state claimed that it didn’t work properly.
Kalshi started blocking users whose registration was linked to addresses in Michigan within hours.
However, setting up geofencing takes more time. Kalshi has repeatedly argued in court that geofencing would be prohibitively expensive and would potentially violate CFTC rules, though opponents have questioned both claims, noting that businesses with lower valuations have successfully geofenced states and that the CFTC rules Kalshi cites concern discriminating based on financial resources, not location.
Kalshi submitted an emergency motion last week, which the court approved, allowing it to continue using registration-based blocking instead of geofencing for now.
“In response to an emergency motion by Kalshi, the court amended the temporary restraining order to permit Kalshi to use IP-based geolocation and residency restrictions to prevent Michigan users from trading sports event contracts, pending further investigation into the viability of GPS-based restrictions for a nationwide exchange,” a Kalshi spokesperson told InGame.
Until then, non-residents who visit Michigan would still be able to access Kalshi’s sports event contracts, while Michigan residents who visit other states may still be blocked.
Hearing next week
In Nevada, Kalshi initially used registration-based blocking before switching to its geolocation-based blocking, though the in-house solution would not appear to be an option for Michigan. Despite the long list of states that have attempted to ban Kalshi’s sports event contracts, Michigan and Nevada are the only two states that have actually been able to enforce such a ban.
There will be a hearing next Monday — the day the initial order expires — to determine whether to issue an injunction that would continue the ban. The current temporary restraining order was granted ex parte, meaning it was made before Kalshi had a chance to make its case, so next week’s hearing will be the prediction market’s first chance to do so.
