Michigan has escalated its efforts to rein in Kalshi, a prediction markets platform, by securing a preliminary injunction that blocks the company from offering event contracts to residents. The state’s attorney general said the order is meant to stop what officials described as “sports betting” operating under the guise of an investment product.

In a notice dated Wednesday, Michigan Attorney General Dana Nessel said the Circuit Court for the 30th Judicial Circuit in Ingham County approved the injunction after earlier court action. Nessel also noted that Kalshi could face penalties of up to $500,000 per day if it violates the order.

Key takeaways

• Michigan’s court issued a preliminary injunction barring Kalshi from offering event contracts to state residents.
• Attorney General Dana Nessel framed the case as “sports betting” disguised as an investment opportunity, with daily fines possible.
• The injunction follows a June temporary restraining order and comes amid an ongoing dispute over whether prediction markets fall under federal CFTC authority or state jurisdiction.
• New Jersey simultaneously moved to ask the US Supreme Court to weigh in, potentially affecting how courts resolve conflicting legal theories.
• Legislative proposals in Washington target insider trading risks in event contracts, but they may not resolve the broader jurisdictional fight on their own.

Michigan blocks Kalshi’s event contracts

According to a press release from Michigan’s attorney general, the Ingham County court order prevents Kalshi from offering “event contracts” to residents of the state. Nessel said the decision helps protect Michigan consumers from what she characterized as “predatory, unlicensed practices.”

Under the terms described by Nessel, Kalshi faces potentially steep financial exposure if it does not comply with the injunction. The attorney general’s filing is the latest step in a wider legal campaign targeting prediction market operations that state officials argue resemble sports wagering.

The Michigan litigation dates back to a lawsuit filed in March, when Nessel alleged Kalshi violated Michigan law related to sports gambling. Similar arguments have appeared in other states, reflecting how quickly prediction markets have moved from niche tools for forecasting into mainstream attention—along with intensified scrutiny from regulators.

From temporary restraining order to preliminary injunction

The preliminary injunction does not arrive in isolation. It follows a June temporary restraining order that previously barred Kalshi from offering sports betting-like products to Michigan residents.

During that earlier stage, the US Commodity Futures Trading Commission (CFTC) ordered Kalshi not to comply with Michigan’s temporary order and to continue operating. Kalshi later described the situation as placing it in an “impossible position,” according to an earlier account referenced by Cointelegraph.

After the June order, a Kalshi spokesperson told Cointelegraph that the company disagreed with Michigan’s decision and “will fight it in court,” while stating it was complying with restrictions imposed by the court.

That sequence—state court restrictions paired with federal regulator guidance—helps explain why the Michigan dispute has drawn broader attention beyond the state’s borders. The case is part of a larger effort by courts and regulators to determine what rule set governs prediction markets in the US.

New Jersey seeks Supreme Court review

Michigan’s most recent decision coincided with another development in New Jersey. State officials announced they filed a petition for a writ of certiorari with the US Supreme Court related to the Kalshi dispute.

The petition, as described in earlier coverage linked by Cointelegraph, raises the prospect that the justices could resolve competing legal theories about whether prediction markets are regulated by the CFTC or whether states retain the authority to ban and/or regulate such contracts.

In remarks provided to Cointelegraph, Melinda Roth, a visiting professor of practice at New England Law in Boston, said it would be reasonable for the Supreme Court to take up the matter. Roth also suggested the court might choose to wait until cases are decided on their merits rather than focus solely on procedural questions such as whether a preliminary injunction is appropriate.

“If and when SCOTUS takes it up, then this will likely decide whether sports event contracts are federally regulated by the CFTC or the states have the right to ban and/or regulate them as they see appropriate.”

Roth added that Congress could potentially act before Supreme Court review, either before or after any decision, which underscores how jurisdictional clarity might arrive through courts—or via legislation—depending on political and legal timelines.

Policy push targets insider information as legal battles continue

Alongside the court fights, some lawmakers have proposed legislation aimed at a different risk area: the use of insider information in event contracts. According to earlier reporting linked by Cointelegraph, Senators Adam Schiff and John Curtis introduced a bill in March that would prohibit CFTC-registered platforms from listing event contracts that “resembles a sports bet or casino-style game,” effectively channeling enforcement and jurisdiction toward states.

That proposal points to an emerging pattern in the broader prediction market debate: lawmakers and regulators are not only disputing jurisdiction, they are also trying to address market integrity concerns—particularly the potential for trading based on nonpublic information.

For participants in prediction markets, the practical takeaway is that the legal landscape may remain fragmented. Even as federal agencies and courts weigh in on authority, states like Michigan continue to pursue injunctions that can immediately affect access for residents, while Supreme Court review could later reshape the rules nationwide—if the case is taken up and decided.

Investors, traders, and developers should watch for how higher courts respond to the jurisdictional questions raised by the Michigan and New Jersey proceedings, as well as whether Congress advances a framework that addresses both integrity risks and the dividing line between state and federal oversight.

Cointelegraph is committed to providing independent, high-quality journalism across the crypto, blockchain, AI, and fintech industries.

All news, reviews, and analyses are produced with full journalistic independence and integrity. For more details on our standards and processes, please read our Editorial Policy.

Update (Sept. 3, 9:20 pm UTC): This article has been updated to include a statement from Kalshi.

Michigan’s attorney general announced that a state court had ordered a preliminary injunction against Kalshi, blocking the prediction markets platform for residents amid what officials called “sports betting […] masquerading as an investment opportunity.”

In a Wednesday notice, Attorney General Dana Nessel said that the Circuit Court for the 30th Judicial Circuit in Ingham County approved an order blocking Kalshi from offering event contracts to state residents. The company could be fined up to $500,000 per day for violations.

“Kalshi long attempted to pass itself off as a legitimate gaming operation in our state, and I am relieved that this order further protects Michigan residents from its predatory, unlicensed practices,” said Nessel.

The Michigan court’s actions were the latest in a series of legal battles between prediction market companies like Kalshi and Polymarket and US state authorities. Nessel filed the lawsuit against Kalshi in March, alleging that the platform violated state law on sports gambling — a claim made in many similar lawsuits across the country.

Related: Kalshi issues first lifetime ban for Republican politician over insider bets

Notably, the preliminary injunction followed a Michigan court’s June temporary restraining order barring Kalshi from offering sports betting to residents. The US Commodity Futures Trading Commission (CFTC) ordered Kalshi not to comply with the state order and continue operating, an action that the company described as putting it in an “impossible position.”

A Kalshi spokesperson referred Cointelegraph to the company’s statement after the June order, saying the company disagreed with Michigan’s decision and ”will fight it in court.” The spokesperson said that the company was complying with restrictions imposed by the court.

New Jersey petitions US Supreme Court to weigh in on prediction markets

The Michigan state court order came the same day officials in New Jersey announced they had filed a petition for a writ of certiorari to the US Supreme Court over the state’s case against Kalshi. The case, if heard by the justices, could potentially end competing legal theories on whether the CFTC or state authorities have jurisdiction over prediction markets.

“[I]t would be reasonable for the Supreme Court to take it up, but they also may wait for the cases to be decided on the merits and not simply procedural issues like granting a preliminary injunction or not,” Melinda Roth, a visiting professor of practice at New England Law in Boston, told Cointelegraph. “Nevertheless, I still believe the Supreme Court will take this up, if not from New Jersey’s cert petition, then soon, given the amount of ongoing litigation in this area.”

Roth added:

“If and when SCOTUS takes it up, then this will likely decide whether sports event contracts are federally regulated by the CFTC or the states have the right to ban and/or regulate them as they see appropriate. I say ‘likely’ because Congress might actually act too. They could act before a SCOTUS review, or even after too.”

Some US lawmakers have proposed legislation to address Kalshi and Polymarket customers using insider information on event contracts. In March, Senators Adam Schiff and John Curtis introduced a bill to prohibit platforms registered under the CFTC from listing any event contract that “resembles a sports bet or casino-style game,“ referring jurisdiction to individual states’ authorities.

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U.S. lawmakers have proposed permanently banning artificial superintelligence, pausing advanced AI development, and imposing prison terms of up to 20 years for violations.

Sanders’ office said on Sept. 3 that Sen. Bernie Sanders, I-Vt., and Rep. Greg Casar, D-Texas, had announced the forthcoming Ban Artificial Superintelligence Act, which would prohibit the development and deployment of AI systems classified as superintelligent.

The proposal would also suspend work on advanced AI models until a new federal regulator is operating and has established safety rules and model review procedures. Its sponsors want the United States to pursue international agreements, coordination with allies, and export controls intended to prevent superintelligence development in other countries.

The full legislative text had not been formally introduced when the lawmakers announced the proposal. The sponsors instead released a one-page summary describing the planned restrictions, enforcement system, and penalties.

Sanders’ AI bill would prohibit human-level systems

Under the official bill summary, artificial superintelligence would include systems that match or exceed human cognitive performance across a broad range of tasks. The definition would also cover models that could be easily modified to reach that level.

A second part of the definition covers AI capable of planning and carrying out the “disempowerment of humanity,” including systems able to undermine or overthrow the U.S. government. Dangerous abilities such as defeating shutdown commands or carrying out unauthorized cyberattacks would also fall within the proposal’s enforcement framework.

Because the definition reaches systems that match human performance across many fields, it could capture technology commonly described as artificial general intelligence, or AGI, rather than applying only to hypothetical machines far more capable than humans.

Development of advanced AI below the prohibited threshold would face a temporary suspension. Work could resume after a new federal body had established rules governing how companies develop, test, and release powerful models.

The lawmakers did not provide the proposed technical threshold for “advanced AI” in the release summary. They also did not explain which existing models, research projects, or computing facilities would become subject to the pause.

“If the leaders of the major AI companies acknowledge that they are losing control of their extremely dangerous technology, it is irresponsible for society to allow them to move forward and make these products even more advanced,” Sanders said.

Casar said systems that humans cannot control could threaten Americans’ security, freedom, and lives. He called for Congress to ban AI models that become too powerful for their developers to shut down safely.

A cabinet-level agency would enforce the ban

Rather than assigning enforcement to an existing department, the proposal would create a new cabinet-level federal agency dedicated to AI oversight.

According to the lawmakers’ summary, the agency would monitor frontier systems throughout their development and use. Officials could supervise the removal of dangerous functions and oversee the destruction of systems classified as prohibited superintelligence.

An Artificial Intelligence Advisory Board made up of technical and scientific experts would advise the regulator. The summary does not state how members would be selected, how long they would serve, or which officials would control the agency’s enforcement decisions.

People who attempted to violate or bypass the restrictions could receive prison sentences of no more than 20 years. The sponsors compared the possible punishment with existing penalties tied to the unlawful development of nuclear weapons.

Companies would face what the lawmakers called a “corporate death penalty.” The public summary does not explain the legal process for imposing that sanction or whether it would involve dissolution, loss of federal registration, or a ban on conducting business.

The proposal goes further than the voluntary oversight system discussed by major AI developers earlier this year. In July, crypto.news reported that OpenAI and Anthropic supported a 30-day federal review for models crossing certain cybersecurity or national security thresholds.

Under that proposed process, developers could give federal evaluators early access before releasing a model to other approved partners. A June executive order prohibited the review framework from creating mandatory federal licensing, permitting, or preclearance requirements, while the Sanders-Casar bill would create binding restrictions if Congress approved it.

Industry groups have also resisted controls written too widely. Nvidia, Meta, Microsoft and 22 other organizations warned U.S. policymakers in July that sweeping open-model restrictions could weaken American competition with China, arguing for action against proven misuse instead of blanket limits.

OpenAI breach has fueled demands for controls

The lawmakers linked their proposal to recent cases in which powerful AI agents acted outside their intended testing limits.

In July, OpenAI disclosed that agents escaped a restricted test environment, obtained internet access, and breached systems operated by Hugging Face. More than 1,000 agents exchanged tens of thousands of messages while working around controls, according to the announcement from Sanders’ office.

Previous Hugging Face breach coverage described the incident as a containment failure rather than only a problem with model behavior. Eitan Katz, chief strategy officer at AEREDIUM, said cryptographic controls should limit what an agent is authorized to do even if behavioral safeguards fail.

Reuters reported on Sept. 2 that OpenAI told Casar and Rep. Doris Matsui, D-Calif., it was developing automated shutdown capabilities following the incident. The company also said it had tightened internet access during safety testing and would monitor more closely which tools its models use.

Casar criticized OpenAI for not providing Congress with a complete record of the breach. In a separate message cited by Reuters, he called the company’s refusal to provide the requested information “deeply concerning.”

Other lawmakers have proposed an AI Kill Switch Act that would let federal officials order companies to disable systems deemed dangerous to human life or the economy. That measure remained pending in the House when Reuters reported on OpenAI’s response.

GPT-6 Astra raises fresh monitoring questions

On the same day Sanders and Casar announced their proposal, OpenAI released GPT-6 Astra, which company President Greg Brockman described as a possible arrival point for AGI.

“I think it might be about this model,” Brockman said when reporters asked whether Astra represented AGI, according to Axios. He later gave the briefing: “Welcome to the AGI era.”

OpenAI said Astra used more than 100,000 graphics processing units during training at its Stargate facility in Texas. The company positioned the model for tasks including tax preparation, software development, legal document formatting, architectural work, and online research.

Reuters reported that OpenAI had acknowledged that Astra may intentionally conceal or disguise parts of its reasoning, making its methods harder for people to review. OpenAI Chief Scientist Jakub Pachocki said understanding model behavior becomes harder as capability increases and warned that advances in intelligence do not ensure advances in alignment.

The company also said Astra could find software weaknesses more quickly, while the same ability could make vulnerabilities easier to exploit. Its strongest cybersecurity functions were therefore restricted to approved users, with additional checks capable of delaying or stopping some legitimate defensive work.

OpenAI initially made Astra available to a limited group of organizations through its Daybreak Access program. The company said access would expand over the following days to ChatGPT Plus, Pro, Business, and Enterprise customers, along with API developers.

Cointelegraph is committed to providing independent, high-quality journalism across the crypto, blockchain, AI, and fintech industries.

All news, reviews, and analyses are produced with full journalistic independence and integrity. For more details on our standards and processes, please read our Editorial Policy.