Michigan Cracks Down on Unlicensed Sports Prediction Markets

The Michigan Gaming Control Board (MGCB) has launched an investigation into sports prediction platforms operating without a license in the state. The regulator expressed concerns that these entities, which function outside of Michigan’s established regulatory structure, pose notable threats to consumer protection.

In a statement, the MGCB emphasized that its actions mirror those of regulatory bodies in other states, aiming to prevent potential risks to the integrity of Michigan’s legal sports betting system.

MGCB Executive Director Henry Williams stated, “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. We are actively investigating these practices and will pursue appropriate measures to protect Michigan bettors.”

Risks to Bettors Highlighted by Michigan Regulator

The MGCB cautioned that unlicensed sports prediction platforms could mislead consumers by blurring the distinction between betting for entertainment and financial trading. The regulator identified significant risks associated with these sites, including potential exposure to fraud, identity theft, and insufficient data security measures.

The board also pointed out that these sites are not obligated to comply with the regulatory safeguards required for licensed sports betting operators, such as age verification, Know Your Customer (KYC) protocols, Anti-Money Laundering (AML) measures, responsible gambling programs, and monitoring for betting integrity.

Without these protections, Michigan bettors could be left vulnerable to financial harm and privacy risks. Additionally, the MGCB warned that promoting sports betting as an investment opportunity runs counter to the state’s principles for responsible gambling.

Williams further explained, “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.”

Focus on Kalshi, Robinhood, and Broader Market Activity

According to the MGCB’s announcement, the ongoing probe specifically targets platforms like Kalshi and Robinhood, which allow s to buy and sell event contracts based on the outcomes of sporting events. The board underlined that these sites by Michigan’s established regulations, creating further consumer protection concerns.

While Michigan has initiated its own investigations, other states such as Nevada, New Jersey, Connecticut, and Ohio have already taken steps to address the growing issue. Some have even issued cease-and-desist letters to operators like Kalshi. In response, Kalshi challenged the regulators’ actions in court, with initial rulings in Nevada and New Jersey favoring the platform, although further legal proceedings are expected.

The MGCB’s actions are part of a broader push against various unauthorized gambling activities. Recently, the regulator issued 13 cease-and-desist letters to offshore operators. The agency is also engaged in a legal dispute over regulatory authority involving Churchill Downs and its TwinSpires app.

After Northville Downs, Michigan’s only racetrack, temporarily shut down, the MGCB issued a cease-and-desist order against TwinSpires, arguing that the regulator has jurisdiction over advance deposit wagering (ADW) apps. Churchill Downs, however, maintains that the federal Interstate Horseracing Act governs ADW operations and secured a preliminary injunction to continue its services in Michigan while the case proceeds.

Kalshi has similarly argued that oversight of event contracts should fall under the Commodity Futures Trading Commission (CFTC) as per the Commodities Exchange Act, rather than individual state regulators. This broader regulatory debate continues to play out as Michigan and other states move forward with their investigations.

Source:

‘’MGCB Cracks Down on Unlicensed Sports Prediction Platforms’’, news.worldcasinodirectory.com, April 14, 2025.