Michigan attorney general sues Kalshi over alleged unlicensed sports betting operation
Michigan Attorney General Dana Nessel has taken Kalshi to court, accusing the prediction-market company of running what amounts to an illegal sportsbook in the state.
Court documents filed on Tuesday (March 3) in Ingham County Circuit Court, and cited by The Closing Line, show the case, Nessel v. Kalshiex LLC, centers on claims that Kalshi lets Michigan residents place sports-related wagers without approval from the Michigan Gaming Control Board. Judge Rosemarie Aquilina has been assigned to the case, which is still pending.
The lawsuit states that Kalshi presents itself as a financial trading platform while effectively operating as a sportsbook.
“Kalshi offers an online sports betting operation to residents in the State of Michigan without the licensing approval of the Michigan Gaming Control Board,” the complaint states. “Specifically, Kalshi operates a so-called prediction market through which residents of the State of Michigan can engage in unlicensed gambling under the guise of trading event contracts.”
State lawyers say the company allows customers to buy contracts tied to the outcome of sporting events and other sports-related scenarios. If a user’s prediction is correct, they stand to make money.
The filing also says Kalshi does business across the country, including in Michigan, where it allegedly promotes its platform to residents and processes transactions using common financial systems available to consumers in the state.
“These practices violate Michigan’s prohibitions against gambling as well as several provisions of LSBA,” the complaint states, referring to Michigan’s Lawful Sports Betting Act.
Michigan Attorney General alleges sports wagers made on Kalshi
The complaint lays out several examples of the types of event contracts available to users.
Among them are predictions about who will win a hockey matchup between the Belleville Senators and the Syracuse Crunch in the American Hockey League, or a game that included Frölunda HC and Luleå Hockey in Sweden’s top league. Other wagers include contracts on whether golfer Patrick Reed will outperform Daniel Hillier during a DP World Tour event.
According to the lawsuit, users can also wager on combined point totals, such as whether the Detroit Pistons and Washington Wizards will score more than 224.5 points in a game. Another example cited involves predicting whether Rider University will beat Marist University by more than 9.5 points in a college basketball contest.
The state argues that Kalshi has broadened its menu of sports-related contracts to include bets on individual player touchdowns, margins of victory, total game scores and even bundled outcomes spanning multiple events.
“In each case, the bettors’ return is determined entirely by an outcome outside their control,” the complaint states.
Prediction platforms face regulatory scrutiny
Michigan’s lawsuit arrives as prediction markets face growing examination nationwide.
State regulators have previously said they were looking into such platforms, cautioning that they may sidestep Michigan’s tightly regulated sports betting system.
“Unlicensed entities not only pose a risk to consumers but also undercut the integrity and revenue-generating potential of the state’s regulated sports betting industry. We are actively investigating these practices and will pursue appropriate measures to protect Michigan bettors,” MGCB Executive Director Henry Williams said in April 2025.
The larger dispute hinges on classification. Companies like Kalshi argue that their products function as financial exchanges subject to federal commodities rules, while states contend that sports-based contracts fall under gambling laws.
California and other states have also begun scrutinizing sports-linked prediction markets as regulators weigh whether they run afoul of existing betting statutes.
Featured image: Kalshi / Dana Nessel via X
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