Michigan judge blocks Kalshi sports bets while Illinois tax fight heads to court
A Michigan judge on Monday blocked Kalshi from allowing state residents to place financial bets on sports, halting its sports event contract operations there pending further proceedings. The ruling came as Kalshi pursues separate federal lawsuits against Illinois over a 15% gross receipts tax and licensing requirements set to take effect July 1. Kalshi argues federally regulated event contracts fall outside state reach.
The Michigan injunction gives other state attorneys general a proven playbook: seek a pre-merits ban before Kalshi can reach federal appellate preemption rulings. Kalshi is now fighting state-level restrictions in Michigan, Illinois, Minnesota, Kentucky, and New Mexico simultaneously, each demanding separate legal budgets and potential geofencing.
The Illinois 15% tax would erode margins against untaxed competitors if replicated elsewhere. Every state victory emboldens copycat statutes, stretching Kalshi's legal team thin and forcing the platform toward market-by-market retreat rather than one clean federal victory. Polymarket faces identical exposure, making the preemption outcome in any single federal court a survival event for both platforms.
The Minnesota suit joins the CFTC's parallel action against that state's felony ban, making Minnesota the third front where Kalshi and Polymarket are jointly challenging state-level prohibitions after Michigan's 14-day restraining order and Illinois's tax fight.