Coinbase Loses Michigan Bid to Block Prediction-Market Enforcement

Coinbase Financial Markets has failed to secure a preliminary injunction preventing Michigan officials from applying state sports-betting laws to its event contracts, dealing the exchange another setback in the widening U.S. fight over prediction-market regulation. U.S. District Judge Shalina D. Kumar issued the ruling on August 6.

Coinbase sued Michigan Attorney General Dana Nessel and other state officials in December 2025, arguing that event contracts offered through federally regulated markets fall under the Commodity Exchange Act and the Commodity Futures Trading Commission’s exclusive jurisdiction. The company wants Michigan customers to access sports contracts supplied through Kalshi. Its preliminary-injunction motion was heard in June, according to the federal court docket.

Kumar found that Coinbase had not demonstrated a likelihood of succeeding on its preemption claims. In particular, the court was unconvinced that sports event contracts necessarily qualify as “swaps” under federal commodities law, which is central to Coinbase’s argument that Michigan lacks authority over them.

The judge also rejected the exchange’s claim that complying with both federal derivatives rules and Michigan’s Lawful Sports Betting Act would be legally impossible. Higher costs or operational difficulty were not enough to establish that conflict, according to the ruling.

New: District court judge denies Coinbase motion for a preliminary injunction against Michigan.

One of my favorite quotes in a prediction markets case: “Coinbase’s averments are, in a word, applesauce.”

I feel like that’s not a line you want to see from a judge.…

— Dustin Gouker (@DustinGouker) August 7, 2026

Michigan Courts Push Back

Coinbase is not the first prediction-market company to lose this argument in Michigan. In June, U.S. District Judge Paul Maloney denied similar injunction requests from Polymarket and Robinhood, concluding that sports-event contracts were likely not swaps and finding no clear indication that Congress intended to displace state gambling regulation.

The national picture remains divided. On July 27, a Minnesota federal judge temporarily blocked that state’s broader prediction-market ban after finding that the CFTC, Kalshi and Polymarket were likely to succeed on their federal-preemption challenge.

Kumar’s ruling is not a final judgment on Coinbase’s lawsuit. The case can continue on the merits, while Coinbase may also seek appellate review of the injunction denial. For now, however, Michigan retains the ability to press its position that sports-linked event contracts remain subject to state gambling rules.