Michigan Judge Rejects Coinbase Bid to Block State Action on Sports Event Contracts

A federal judge in Michigan has denied Coinbase’s request to block potential state enforcement against its planned offering of sports event contracts, dealing a setback to the exchange’s legal fight over prediction markets.

Judge Rejects Federal Preemption Argument

US District Judge Shalina Kumar ruled Thursday that Coinbase failed to show it would likely succeed on claims that federal law preempts Michigan’s authority over the matter. Coinbase had sued Michigan in December 2025, arguing prediction markets fall under exclusive CFTC jurisdiction rather than state gambling regulators, and that complying with both federal and state law would be impossible. Kumar dismissed that reasoning bluntly, writing that Coinbase’s arguments were, in a word, “applesauce,” and that difficulty complying with state law doesn’t make compliance impossible.

Part of a Broader Legal Fight

The case is one of several Coinbase filed against states including Michigan, Illinois, and Connecticut. Chief Legal Officer Paul Grewal has argued prediction markets function as neutral exchanges rather than sportsbooks. Separately, the CFTC has sued nine states, including Kentucky most recently, as it pushes to establish federal oversight over the fast-growing prediction markets industry, while also proposing new rules in June supporting broader sports betting frameworks.