Coinbase sues Illinois, Michigan, and Connecticut over prediction markets authority

Source: Yellow Original Title: Coinbase sues Illinois, Michigan, and Connecticut over prediction markets authority

Original Link: https://yellow.com/es/news/coinbase-demanda-a-illinois-michigan-y-connecticut-por-la-autoridad-sobre-mercados-de-predicción A cryptocurrency platform filed lawsuits against Illinois, Michigan, and Connecticut on Friday, seeking court declarations that prediction markets are under exclusive federal oversight.

The platform argues that states cannot enforce gaming laws on federally regulated event contracts.

Their Chief Legal Officer (Paul Grewal) said that state efforts “stifle innovation and violate the law.”

The timing coincided with the announcement of entering prediction markets through a partnership with Kalshi.

What happened

The platform filed lawsuits in federal courts requesting injunctions to prevent state gambling regulators from enforcing local betting statutes.

The lawsuits contend that the Commodity Exchange Act (CEA) grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over event contracts like derivatives.

Illinois gaming authorities issued “cease and desist” orders to Kalshi, Robinhood, and Crypto.com. The letters warned that facilitating event contracts related to sports without state gaming licenses constitutes illegal gambling.

Michigan and Connecticut regulators adopted similar compliance positions.

Grewal argued that Congress deliberately excluded only specific items like “onions” and “box office revenue” from the definition of commodities. This means all other topics, including sporting events, fall within the scope of the CFTC.

The platform plans to launch prediction market trading in January 2026. The company warned that state interference would cause “immediate and irreparable” business harm.

Why it matters

The dispute now spans 10 states, including Maryland, New Jersey, Ohio, Nevada, Massachusetts, and New York.

Trading volumes in prediction markets exceeded $28 billion worldwide in 2025, with weekly peaks of $2 billion. Kalshi, the associated exchange, is valued at $11 billion.

Allowing states to regulate prediction markets individually would fragment liquidity and create 50 different compliance frameworks. The platform argues this contradicts Congress’s intent for uniform federal oversight of derivatives markets.

A federal judge in Nevada dissolved a preliminary injunction against Kalshi in late November, ruling that state regulatory interests outweighed alleged damages. That decision is now under appeal before the Ninth Circuit.

Industry observers expect that jurisdictional issues could ultimately reach the Supreme Court, as several cases are pending in different federal circuits. The outcome will determine whether prediction markets operate under unified federal rules or face state-by-state restrictions.