Michigan Federal Judge Denies Coinbase Bid to Block State Enforcement on Sports Event Contracts

On August 6, 2026, US District Judge Shalina D. Kumar denied Coinbase's bid for a preliminary injunction to block Michigan from enforcing gambling laws against its sports event contracts. Rejecting Coinbase's arguments that the contracts are federally regulated swaps, Judge Kumar called the exchange's claims "applesauce." The ruling marks a major setback for Coinbase's multi-state legal push to establish federal supremacy over prediction markets, which faces strong opposition from state regulators, Detroit, and 33 Native American tribes.

Coinbase preliminary injunction denial

• ▪The preliminary ruling by Judge Shalina D. Kumar allows Coinbase Financial Markets to appeal the denial to the Sixth Circuit while the underlying lawsuit continues.
• ▪Judge Shalina D. Kumar dismissed the Michigan Gaming Control Board from the lawsuit on sovereign-immunity grounds, leaving Michigan Attorney General Dana Nessel and the board's directors as the remaining defendants.
• ▪On August 6, 2026, US District Judge Shalina D. Kumar of the Eastern District of Michigan denied Coinbase Financial Markets' request for a preliminary injunction to block Michigan from enforcing its gambling laws against the exchange's sports event contracts.

Federal preemption arguments rejected

• ▪Judge Shalina D. Kumar rejected Coinbase's preemption arguments, ruling that the Commodity Exchange Act does not preempt Michigan's gambling laws and that complying with both is not impossible.
• ▪Coinbase argued that Michigan's Lawful Sports Betting Act is preempted under the Constitution's Supremacy Clause because the sports event contracts it offers through Kalshi are federally regulated derivatives.

Sports event contracts classification

• ▪Judge Shalina D. Kumar ruled that Coinbase's sports event contracts are likely not 'swaps' under the Commodity Exchange Act, stating that Coinbase's broad interpretation would sweep in everything from politics to sports.
• ▪Coinbase Chief Legal Officer Paul Grewal defended the contracts, stating that prediction markets are fundamentally different from sportsbooks because they act as neutral exchanges matching buyers and sellers.

State gambling law enforcement

• ▪Michigan had previously secured a temporary restraining order against prediction market platform Kalshi over the offering of sports event contracts.
• ▪Thirty-three federally recognized Indian tribes and the City of Detroit filed amicus briefs supporting Michigan, arguing that a Coinbase victory would undermine tribal gaming sovereignty and reduce casino tax revenues.

Multi-state prediction market litigation

• ▪Coinbase sued Michigan, Connecticut, and Illinois in December 2025 to establish federal supremacy over its event contracts, and has since faced enforcement actions in states including Nevada and Wisconsin.
• ▪The Commodity Futures Trading Commission has sued nine states, most recently Kentucky in June 2026, in an effort to assert exclusive federal oversight over prediction markets.