Michigan judge rejects Coinbase bid to halt state action on Kalshi contracts
Regulation & Gov ·
A federal judge in Michigan declined to stop state regulators from pursuing enforcement against sports event contracts tied to Kalshi, finding that Coinbase had not shown federal law preempts the state's authority.
The ruling, reported by The Block, leaves Michigan free to continue its enforcement effort while Coinbase's underlying legal challenge proceeds. Coinbase had sought an order blocking the state from acting against the sports-related contracts, arguing that federal oversight should override local regulatory reach. The judge disagreed, concluding Coinbase failed to demonstrate that federal statutes displace the state's power to regulate the products in question.
The dispute centers on how sports event contracts offered through Kalshi should be classified and who has jurisdiction over them. Kalshi operates as a CFTC-designated contract market, a status that places it under federal derivatives oversight rather than state gambling law, according to background material on Coinbase and its involvement in event-contract markets. That federal designation has been central to arguments from Kalshi and its partners that state regulators lack authority to intervene, but the Michigan decision indicates courts are not automatically accepting that premise.
The case fits into a broader pattern of state-level pushback against sports-themed prediction contracts even as federal agencies have taken the opposite stance elsewhere. In a separate matter, the Department of Justice and the CFTC moved to block Arizona's prosecution of Kalshi, arguing that its sports and election contracts qualify as regulated financial swaps under federal law. The split outcomes across states point to an unsettled legal landscape over whether federal designation as a derivatives exchange shields these products from state enforcement nationwide.
The Michigan ruling arrives as Kalshi expands its footprint across media and consumer channels, including a planned sponsored-odds integration with Fox News and new parent-portal and identification tools aimed at preventing underage use. Competitive pressure is also building, with Crypto.com entering event-contract markets through a partnership targeting what it has called a $1 trillion opportunity, directly challenging Kalshi and Polymarket. Meanwhile, Kalshi, Polymarket, and Hyperliquid are facing bipartisan scrutiny in the House as the CFTC signals it may issue formal rules for prediction markets.
What remains unresolved is whether Coinbase will appeal the Michigan decision or pursue a narrower legal theory, and how the parallel federal-state conflict — playing out differently in Michigan and Arizona — will be reconciled as regulators move toward clearer national rules for event contracts.