Quick Take
- A Michigan federal judge has rejected Coinbases preliminary injunction motion seeking to block potential state enforcement over its planned offering of sports event contracts.
- “Coinbases averments are, in a word, applesauce,” U.S. District Judge Shalina Kumar wrote in the ruling.
A Michigan federal judge has denied Coinbase's preliminary injunction bid to block state enforcement against sports event contracts.
U.S. District Judge Shalina Kumar of the Eastern District of Michigan ruled on Thursday that Coinbase failed to establish that it is likely to succeed on the merits of its claims that federal law preempts Michigan's jurisdiction.
The crypto exchange sued Michigan in December 2025, arguing that prediction markets fall under the exclusive jurisdiction of the Commodity Futures Trading Commission under the federal Commodity Exchange Act (CEA) rather than state gaming regulators.
Coinbase specifically seeks to use its platform to provide customers, including those in Michigan, access to event contracts offered by Kalshi.
The exchange claims that Michigan's gambling laws are “conflict preempted” because they frustrate Congress's efforts to create a uniform federal regulatory scheme and because complying with both the CEA and the state's Lawful Sports Betting Act (LSBA) would be impossible, according to the filing.
However, the judge rejected the arguments, holding that Coinbase failed to show that sports event contracts qualify as swaps under the CEA. She also rejected the exchange's contention that complying with both federal and state law would be impossible.
“Coinbase's averments are, in a word, applesauce,” Judge Kumar wrote. “[It] is not impossible for Coinbase to comply with the LSBA simply because it is costly and challenging.”
“Coinbase has not carried its burden to establish the factors required for a preliminary injunction against the Defendants,” the judge added.
The Block has reached out to Coinbase for comment.
Nationwide battle
The Michigan case is part of a broader legal battle over prediction markets regulation. In December, Coinbase sued the states of Michigan, Illinois, and Connecticut, intensifying an ongoing legal dispute.
“State efforts to control or outright block these markets stifle innovation and violate the law,” Coinbase Chief Legal Officer Paul Grewal said at the time.
“Prediction markets are fundamentally different from sportsbooks,” Grewal added. “Casinos win only if you lose and set odds to maximize their profits. Prediction markets are neutral exchanges, indifferent to price, that match buyers and sellers.”
The CFTC has also sued several states as part of its push to establish federal oversight of the industry. In June, Kentucky became the ninth state to be sued by the CFTC. Over the past year, the agency has brought complaints against Wisconsin, Illinois, Arizona, Connecticut, New York, New Mexico, Minnesota, and Rhode Island.
Also in June, the CFTC unveiled a slate of new rules that would still allow overall support for sports betting, despite opposition from state regulators.