The Michigan Gaming Control Board (MGCB) has launched formal investigations into several unlicensed platforms offering sports-related prediction markets, flagging serious concerns about consumer safety and the erosion of state-regulated betting standards. These platforms, including Kalshi and Robinhood, are being scrutinized for offering financial products that enable users to trade predictions on sports outcomes—functioning outside Michigan’s legal sports betting framework.

Michigan aligns with national pushback against event contracts:

The MGCB’s actions mirror enforcement steps taken by gaming authorities in other states, such as Ohio, Nevada, New Jersey, and Connecticut. These regulatory bodies have initiated cease-and-desist orders or court challenges targeting similar operations. In Michigan, the focus is on how such unlicensed offerings might undermine the regulated betting market and confuse consumers by presenting gambling as a financial trading opportunity.

“These platforms, which bypass Michigan’s regulatory framework, have raised significant concerns about consumer protection,” said MGCB Executive Director Henry Williams. “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.”

Williams emphasized that positioning sports contracts as investments is at odds with Michigan’s principles on responsible gambling. “Sports betting is meant to be a form of entertainment, not a financial investment,” he stated in the regulator’s press release. “By framing sports contracts as investment vehicles, these platforms risk confusing consumers and undermining the state’s commitment to responsible gaming.”

Key regulatory gaps and consumer protection risks:

Unlike licensed sportsbooks in Michigan, which are bound by regulations including age verification, anti-money laundering (AML) protocols, Know Your Customer (KYC) procedures, self-exclusion systems, and integrity monitoring, these unlicensed platforms often operate without such guardrails. MGCB warns that this lack of oversight increases the risk of fraud, identity theft, and misuse of sensitive financial data.

Many of these platforms also allow access to users as young as 18, which violates Michigan’s legal sports betting age requirement of 21. This discrepancy adds to MGCB’s concern about potential harm to underage users and the broader impact on consumer trust.

The rise of these platforms blurs the line between regulated entertainment and speculative trading. MGCB officials note that consumers may be misled into viewing these prediction-based markets as legitimate investments, which could undermine efforts to promote responsible gaming habits.

Several states are already pursuing legal action. In one notable example, Kalshi has challenged cease-and-desist orders in both Nevada and New Jersey courts, arguing that the Commodity Futures Trading Commission (CFTC) holds jurisdiction under the Commodity Exchange Act. In parallel, Michigan is also contending with a legal battle over federal versus state control in a separate case involving Churchill Downs and advance deposit wagering via its TwinSpires app.

Meanwhile, MGCB continues to address violations across various gambling sectors. This includes issuing 13 new cease-and-desist letters to offshore casinos in the same week it initiated the probe into sports prediction markets.

As investigations progress, the MGCB affirms its intent to pursue all necessary actions to safeguard the state’s legal gambling environment. “We will continue to investigate and take all necessary steps as deemed appropriate,” the agency stated, highlighting its commitment to consumer protection and the integrity of Michigan’s regulated sports betting industry.