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.
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Recent updates
Crypto.com and Novig Sue Missouri as Market Leaders Hold Back — Eighth Circuit Now in Play via Iowa
Crypto.com and Novig filed federal lawsuits on October 16 challenging Missouri's cease-and-desist orders, arguing their sports event contracts fall under exclusive CFTC jurisdiction. The suits came as Missouri's 30-day compliance window closed. Notably, the market leaders — Kalshi, Polymarket, Robinhood, and Underdog — have not sued; Missouri said it is in 'ongoing discussions' with Kalshi. The outcome is tied to the Eighth Circuit, which is now weighing the same preemption question in Kalshi's appeal of a preliminary injunction denial in Iowa — the fourth federal circuit to take up the prediction market question.
Ohio Escalates Post-Sixth Circuit — Cease-and-Desist to 10 Operators, but Platforms Keep Operating
Emboldened by its Sixth Circuit win, Ohio escalated enforcement against prediction markets. Governor Mike DeWine and the Ohio Casino Control Commission issued cease-and-desist letters dated October 2 to 10 operators, including Polymarket and Robinhood, with an October 16 compliance deadline and penalties up to the value gained from contracts. Kalshi was excluded because a court order already covers it. As of October 20, platforms were continuing to operate in Ohio despite the deadline passing. Polymarket has sued the Commission and Ohio AG Andy Wilson on Commerce Clause and CEA-preemption grounds; Wilson is expected to sue non-compliant operators.
Midterm Election Betting Tops $220M — Double the Entire 2024 Cycle — as Public Opposition Mounts
Traders have wagered more than $220 million on the 2026 congressional midterms across Kalshi and Polymarket, more than double the $92 million bet across the entire 2024 cycle, according to a Reuters analysis of Anti-Corruption Data Collective data published October 14. The 2026 cycle has more than 21,000 individual markets, up from 463 tracked in 2024. Volume is concentrated in a few races, led by the Texas Senate contest. The growth comes despite a Reuters/Ipsos poll finding that most Americans oppose using prediction markets to bet on elections, and amid continuing concern from election officials about integrity and insider trading.