Coinbase loses Michigan prediction markets case as judge denies injunction

Aug 7, 2026

On August 6, 2026, U.S. District Judge Shalina Kumar denied Coinbase's bid for a preliminary injunction to block Michigan from enforcing its sports betting laws against Kalshi event contracts, calling Coinbase's legal arguments 'applesauce.' The ruling rejected Coinbase's claims of federal preemption under the Commodity Exchange Act and broke with a Third Circuit precedent on the classification of sports contracts as swaps. This decision impacts Coinbase's broader multi-state legal strategy against state regulators.

Michigan preliminary injunction denial

▪U.S. District Judge Shalina Kumar denied Coinbase's preliminary injunction bid to block Michigan from enforcing its sports betting law against Kalshi sports event contracts on August 6, 2026.
▪Judge Shalina Kumar rejected Coinbase's argument that complying with both federal law and Michigan's Lawful Sports Betting Act is impossible, stating that expensive compliance does not mean impossible.
▪Judge Shalina Kumar dismissed the Michigan Gaming Control Board from Coinbase's lawsuit due to immunity, leaving the case standing against the board's directors and Attorney General Dana Nessel.

Federal preemption legal arguments

▪Coinbase argued in its December 2025 lawsuit that prediction markets fall under the exclusive jurisdiction of the Commodity Futures Trading Commission under the federal Commodity Exchange Act.
▪Coinbase claimed that Michigan's gambling laws are conflict-preempted because they frustrate federal regulatory uniformity and make simultaneous compliance with federal and state laws impossible.
▪Judge Shalina Kumar ruled that the Commodity Exchange Act's exclusive jurisdiction clause is a grant rather than express preemption, and its savings clauses signal no field preemption.

Prediction market regulatory classification

▪Judge Shalina Kumar's ruling declined to follow an April Third Circuit appeals court decision that found Kalshi's sports contracts fell within the statutory definition of a swap.
▪Judge Shalina Kumar aligned with federal courts in Nevada, southern Ohio, and western Michigan, attributing the legal ambiguity to the impenetrable drafting of the statute.
▪Judge Shalina Kumar held that Coinbase failed to establish that sports event contracts qualify as swaps under the federal Commodity Exchange Act.

Coinbase multi-state litigation strategy

▪The Nevada Gaming Control Board separately sued Coinbase in state court in February 2026 over the same prediction market product.
▪Coinbase seeks to use its platform to provide customers, including those in Michigan, access to sports event prediction contracts offered by Kalshi.
▪Coinbase sued the states of Michigan, Illinois, and Connecticut in December 2025 after gaming regulators in those states moved against Kalshi event contracts.

CFTC state enforcement actions

▪In June 2026, the Commodity Futures Trading Commission unveiled new rules that would allow overall support for sports betting despite opposition from state regulators.
▪The Commodity Futures Trading Commission has sued multiple states, including Kentucky in June 2026 as the ninth state, to establish federal oversight of prediction markets.
▪The Commodity Futures Trading Commission has brought complaints against Wisconsin, Illinois, Arizona, Connecticut, New York, New Mexico, Minnesota, and Rhode Island over the past year.