Coinbase Financial Markets has lost its request for temporary protection in Michigan after a federal judge refused to stop state officials from enforcing sports betting laws against the company’s event contracts.
On August 6, U.S. District Judge Shalina Kumar rejected Coinbase’s request for a preliminary injunction. The decision means Michigan can continue enforcing its sports betting rules while Coinbase’s legal challenge moves forward.
Coinbase argued that its event contracts, offered through federally regulated prediction markets and supplied through Kalshi, should be treated as financial products under federal commodities law. The company said these contracts fall under the authority of the Commodity Futures Trading Commission (CFTC) and should not be controlled by state gambling laws.
The judge disagreed, ruling that Coinbase had not shown enough evidence that its sports event contracts would likely qualify as swaps under federal law. She also rejected the argument that following both federal and Michigan rules would be legally impossible.
The ruling only deals with Coinbase’s request for temporary relief and does not represent a final decision on the entire case.
Growing legal battle over prediction markets
The Michigan decision adds to an ongoing disagreement between courts over whether sports prediction contracts should be regulated as financial products or as gambling activities.
Some courts have supported companies like Kalshi, finding that federal commodities law may prevent states from restricting certain event contracts. Other courts have questioned whether federal law was ever meant to cover sports betting-style markets.
Because of these different opinions, the legal future of prediction markets in the United States remains uncertain.
CFTC pushes for federal control
The Commodity Futures Trading Commission has argued that it has authority over federally regulated prediction markets. The agency has taken action against several states that attempted to restrict these platforms.
The CFTC is also working on new rules that would create a clearer process for reviewing event contracts involving areas such as gaming, illegal activities, or contracts considered against the public interest.
What happens next
The Michigan ruling allows state enforcement to continue for now, but Coinbase can still continue its lawsuit and may challenge the decision through the appeals process.
The case is part of a larger national debate about who should control prediction markets — federal regulators or individual states.
For Coinbase, the outcome could affect how prediction contracts are offered across the country. The company argues that state-by-state restrictions could create different rules for users in different locations.
The next major developments will likely come from possible appeals, future court decisions, and new CFTC regulations. For now, Michigan has gained a temporary legal advantage, but the broader fight over prediction market regulation is far from settled.
