Five people have been arrested after selling the streaming boxes
Kodi users have been sent "a clear warning" to keep the content they view legal after a number of arrests were made earlier this week.
Five people accused of selling modified versions of the popular set-top boxes were taken into custody during early morning raids.
The devices are thought to have been customised with unlicensed add-ons to allow users to watch premium channels such as movies and live football for free.
Kodi is a free software which is legal if used correctly but so-called "fully loaded Kodi boxes" break the rules on copyright.
The Federation Against Copyright Theft (Fact) says removing these devices from sale is now a top priority.
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Fact believes the suspects have made in the region of £250,000 across social media, online forums, as well as their own dedicated websites.
Kodi is basically a free media centre software that anyone can use, modify, or add to.
Many shops sell Kodi-ready devices which are totally legal if used to stream free content or paid-for channels such as Netflix.
The developers behind Kodi are keen to point out that their software is designed to play legally owned media or content "freely available" on the internet.
Users can leave Kodi in its raw form or download Kodi add-ons which allow shows from the BBC and ITV to streamed as well as services such as Netflix and Amazon.
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However, there are also unofficial add-ons that can be found via a simple Google search that allow TV shows, movies, Sky Sports, BT Sports and all of the 3pm kick-offs from the Premier League to be viewed.
All of these are illegal though.
Kieron Sharp, director general of Fact, said: "These arrest should send out a clear warning to anyone involved in the sale and distribution of illegal set-top boxes".
"Set-top boxes loaded with apps and add-ons allowing access to copyright infringing material are very much illegal and anyone involved in selling these boxes should not be surprised to receive a knock on the door."
DCI Pete Ratcliffe, Head of the City of London Police’s Intellectual Property Crime Unit, added: “This operation is aimed at taking out distributors of illegal set top boxes in the north west of England.
“This industry undermines the legitimate sale of subscription television services which employ tens of thousands of people in the UK and whose contributions are key to the creative and sporting industries.
The day of action was instigated by FACT on behalf the Premier League, Sky, BT Sport and Virgin Media.
The five, who were from Bolton, Bootle, Cheadle, Manchester and Rhyl have now been released on bail following questioning.