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The Michigan Gaming Board (MGCB) has officially announced an investigation into predictions markets Kalshi and Robinhood. However, no action has been taken as of yet.
PlayMichigan reported earlier this month that the MGCB had already been investigating the two operators since, at least, April 4. Other states such as Ohio, Nevada and New Jersey have already issued cease-and-desist letters.
Kalshi and Robinhood are federally regulated under the Commodity Futures Trading Commission (CFTC), but are not licensed by the MGCB. MGCB Executive Director, Henry Williams, believes predictions markets poses a threat to consumer protections:
We take consumer protection very seriously and are committed to ensuring that Michigan residents are engaging with safe and legal sports betting options.
“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,” Williams continued. “We are actively investigating these practices and will pursue appropriate measures to protect Michigan bettors.”
What are Kalshi and Robinhood?
Kalshi and Robinhood offer contracts that are traded on an exchange, which does not constitute as a “bet” against the “house.” The two operators partnered together and began offering markets during the Super Bowl and March Madness, bordering on sports betting.
The value of the event contract is determined by market forces, and can change until the expiration date. Customers also have the option to trade out of the position before the expiration date, just like it can a stock. Kalshi looks at these contracts as a financial investment, which does not sit well with the MGCB.
The press release states that Kalshi and Robinhood “contradicts Michigan’s established responsible gaming principles.” Williams expanded upon that in another statement:
Sports betting is meant to be a form of entertainment, not a financial investment. By framing sports contracts as investment vehicles, these platforms risk confusing consumers and undermining the state’s commitment to responsible gaming.
“Moreover, many of these unlicensed platforms are often accessible to individuals as young as 18, in stark contrast to Michigan’s 21+ age requirement for legal sports betting.”
The MGCB is one of the more aggressive regulatory bodies in the US. The Board has already established some discrepancies with its own regulations. It’s appears likely the MGCB is poised to take some kind of action in the near future.
