Who Owns the Risk? Sports Event Contracts in Michigan

Executive summary

Michigan legalized online sports betting in 2019 and built a set of safeguards into the licensing system: operators verify that bettors are at least 21 and in Michigan, honor a statewide self-exclusion list, display a problem-gambling helpline, report suspicious wagering, hold reserves for customer balances and pay a tax that funds prevention and schools. [1] [2] [3] [4] [5] [6]

Sports event contracts reach the same customer through a different door. They are listed on exchanges registered with the CFTC and sold either directly or through brokers. Federal law gives those exchanges strong duties on market integrity and customer funds, but it was not written with consumer gambling safeguards in mind. [18] [19] Michigan has gone to court to keep these contracts out of the state; courts in different circuits have reached opposite conclusions about whether it can. [9] [13] [15]

This brief does not take a side on that jurisdiction question, and it does not endorse or oppose any bill. It maps each safeguard to the party responsible for it under each system, using statutes, rules, court orders and the platforms’ own published terms, so that whichever regulator prevails, the gaps are visible.

Where the law stands

Status as of October 21, 2026. None of these rulings is a final judgment.

The risk-ownership grid

“Assigned” means a statute, rule or binding order names who must act. “Partial” means the safeguard rests on a platform’s own terms, applies through one court order to one platform, or covers only some users. “None found” means NCI searched the federal statute and regulations, the CFTC’s October 19 actions and the platform’s published terms and found no responsible party; it is a finding from searching, not a statement by any agency.

The exchange column uses Kalshi as the example because it is the platform in Michigan’s litigation and publishes its rulebooks and terms. Other exchanges and brokers set their own terms.

Where the gaps are

Age is the widest gap. Michigan treats 21 as the line for sports betting and makes it a crime to knowingly let someone younger bet. [2] The same game outcome can be traded from 18 on an exchange, and NCI found no federal rule that sets any minimum. [22] For Michigan Sports Opportunity’s youth work, this is the safeguard that most directly affects college students and recent high school graduates.

Self-exclusion does not travel. A Michigan resident who enrolls in the state database is blocked at every licensed sportsbook. That enrollment has no effect on an exchange, and the Gaming Control Board has warned that unlicensed sites have no obligation to honor it. [8] Kalshi’s own self-exclusion is voluntary and, by its own terms, stops at its front door. [23]

Advertising is a gap on both sides. Michigan requires helpline messaging but NCI found no rule in force that bars sportsbook ads aimed at people under 21; that is what Senate Bills 713 and 714 would add. [6] [26] On the federal side, the advertising rule that exists applies to brokers, not exchanges, and says nothing about minors. [24]

The federal system is stronger in two places. Exchange surveillance, manipulation rules and segregated customer funds are long-standing federal duties, and Kalshi’s rulebook bars insiders and anyone who can influence an outcome from trading it. [18] [20] [21] A comparison that only counted gaps would miss that.

Prevention money follows the license. Because Michigan’s prevention funding is a fixed draw on sports-betting tax revenue, volume that moves to exchanges pays nothing toward it. [5] In January the NCAA asked the CFTC to suspend college-sport prediction markets “until a more robust system with appropriate safeguards is in place,” naming age and advertising restrictions among the missing safeguards. [25]

The broker layer

Many users never touch the exchange directly; they buy event contracts through a broker app. That splits responsibility further. The Michigan injunction required Kalshi to give notice of the order to brokers offering its sports contracts and states that Kalshi will not be held liable for what a notified broker does, because brokers control which customers see the contracts and where those customers are. [9] Michigan then reached separate agreements with Robinhood and Coinbase. [11] [12]

The same split appears in self-exclusion, which Kalshi says does not limit access through a broker, and in customer-fund protection, where brokers’ customers are covered by federal segregation rules while direct users rely on the clearinghouse’s rule. [23] [19] [21] For any safeguard, the useful question is not only which regulator but which company in the chain must carry it out.

What Michigan institutions can do now

These steps need no new law and no ruling on jurisdiction. They are NCI recommendations.

Questions any framework must answer

Whether the answer comes from Michigan, the CFTC, Congress or the courts, the grid points to the same questions:

• Who verifies age, and is the minimum 18 or 21?
• Does a state self-exclusion list apply, and does it reach access through brokers?
• Who reviews advertising, and is there a rule about audiences under 21?
• Who funds prevention and treatment when wagering-like activity is not taxed as wagering?
• Which company in the exchange-broker chain is responsible for each safeguard?

NCI does not take a position on who should answer them.

Dates to watch

• Nov. 9: Kalshi’s response is due in the Supreme Court petition Michigan supports. [14]
• Nov. 18: Comments are due on both CFTC actions. [16] [17]
• No date set: The Sixth Circuit’s decision on Kalshi’s rehearing petition. [15]
• No date set: Any committee vote on Senate Bills 713 and 714. [26]

Policy Watch tracks these weekly →