Michigan Court Denies Polymarket Injunction Request

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Mon Jun 22, 2026, 7:00 am ET

Read Time: 4 minutes

Michigan Court Denies Polymarket Injunction Request

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A federal judge in Michigan has handed state regulators a significant victory in their ongoing dispute with prediction market operator Polymarket. The ruling denied Polymarket's request for a preliminary injunction and determined that the company's sports-event contracts are likely subject to state gambling laws rather than exclusive federal oversight.

Michigan regulators have argued that the contracts constitute illegal sports betting under state law rather than federally regulated derivatives. The decision marks another important development in the growing legal battle between prediction markets and state gaming regulators. 

As more platforms expand into sports-related contracts, courts continue to examine whether those offerings resemble traditional wagering products offered by US online sportsbooks.

Michigan Court Finds Sports Contracts Fall Outside Federal Derivatives Framework

U.S. District Judge Paul Maloney rejected Polymarket's effort to block enforcement actions by Michigan regulators while the lawsuit proceeds. In his opinion, Maloney concluded that the company failed to demonstrate a likelihood of success on the merits of its claims.

"Plaintiff thus has not met its burden to show a likelihood of success on the merits, and the cloudy legal forecast weakens its showings on the other factors," Maloney wrote. "Plaintiff's motion for a preliminary injunction will thus be denied."

Three Key Findings

First, Maloney determined that sports-related prediction market contracts do not qualify as financial swaps or other traditional derivatives products. As a result, the court declined to accept Polymarket's argument that the contracts fall exclusively under Commodity Futures Trading Commission (CFTC) jurisdiction.

Second, the judge criticized what he described as an overly broad interpretation of federal authority. According to the ruling, Polymarket's position stretched the definition of derivatives far beyond its traditional scope.

Maloney wrote that the company's interpretation was "so vast that it would encompass vast swaths of activity never understood to be associated with the financial industry and instead traditionally associated with core state responsibilities."

Finally, the court noted that Congress has never clearly stated that the Commodity Exchange Act (CEA) should override state authority to regulate gambling activities. Therefore, Michigan retains a strong argument that it can enforce its own gaming laws against sports-event contracts offered within the state.

The ruling strengthens Michigan gambling regulators' position that prediction market sports contracts function similarly to sports wagers rather than financial instruments.

Polymarket Argues Federal Law Preempts State Regulation

Polymarket filed suit after Michigan regulators moved to restrict access to its sports-event contracts. The company argued that federal commodities law grants the CFTC exclusive authority over its offerings.

According to Polymarket, the Commodity Exchange Act preempts state gambling laws when applied to federally regulated event contracts. The company maintained that its products differ from traditional sports betting because they operate through federally supervised prediction markets.

Polymarket sought a preliminary injunction to prevent Michigan from taking enforcement action while the litigation continues. However, the court found that the company had not shown a sufficient likelihood of prevailing on its federal preemption claims.

The denial means Michigan can continue enforcing its regulatory position while the case moves forward.

Decision Could Influence Broader Prediction Market Battles

The Michigan ruling arrives as prediction market operators face increasing scrutiny across the United States. Several states have challenged sports-event contracts, arguing that they mirror products already offered by licensed US online sportsbooks.

At the same time, companies such as Polymarket and Kalshi continue to argue that federal commodities laws govern their operations.

Importantly, Polymarket was not the only company affected by Judge Maloney's reasoning. On the same day, the judge also denied a nearly identical request for a preliminary injunction from Robinhood, which offers sports-event contracts through its prediction market platform.

The parallel rulings signaled that the court's concerns extend beyond a single operator and reflect broader skepticism toward efforts by technology and fintech companies to classify sports-related contracts as federally regulated financial products.

These rulings could provide additional support for state regulators seeking to classify sports prediction contracts as gambling products. However, the broader legal question remains unsettled.

Notably, other courts have reached different conclusions regarding the relationship between federal commodities regulation and state gaming laws. Those conflicting outcomes increase the likelihood of future appellate review.

For now, Michigan has secured an important early victory. The ruling reinforces the state's authority over Michigan gambling activities and adds momentum to regulators seeking greater oversight of sports-related prediction markets nationwide.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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