Coinbase sues, arguing Michigan sports betting laws don’t apply to ‘prediction markets’

The cryptocurrency exchange Coinbase is suing the members of Michigan’s Gaming Control Board and Attorney General Dana Nessel in federal court to prevent them from attempting to apply the state’s gambling laws to a controversial financial instrument called event contracts. 

Event contracts allow traders to essentially bet on the likelihood of future events. Their increasing application to sports has blurred the line between federally regulated prediction markets and state-regulated sports betting.

Coinbase, which filed similar lawsuits against regulators in Connecticut and Illinois, is arguing that so-called "prediction markets” fall under the jurisdiction of the Commodity Futures Trading Commission and that state gaming laws don’t apply. 

The lawsuits were filed in the wake of an announcement that Coinbase had struck a partnership with Kalshi, an exchange that sells event contracts tied to everything from which country will be the next to send human beings to the moon to the outcomes of NFL games, though sports bets account for the vast majority of its business.

"Beginning in January 2026, Coinbase will offer event-contract trading to customers throughout the United States, including in Michigan,” the company wrote in a complaint filed Thursday in U.S. District Court for the Eastern District of Michigan. 

"Because these event contracts are paradigmatic ‘swaps’ as defined by the Commodity Exchange Act…they can only be traded on federally regulated exchanges that are subject to the exclusive jurisdiction of the CFTC.”

• https://www.mlive.com/news/2025/12/coinbase-sues-arguing-michigan-sports-betting-laws-dont-apply-to-prediction-markets.html