Michigan Judge Rejects Coinbase Injunction Bid

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Mon Aug 10, 2026, 10:00 am ET

Read Time: 4 minutes

Michigan Judge Rejects Coinbase Injunction Bid

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Coinbase has suffered another setback in its legal fight against Michigan's regulation of sports prediction markets.

On August 6, U.S. District Judge Shalina Kumar denied Coinbase's request for a preliminary injunction. The ruling allows Michigan officials to continue enforcing state gambling laws against sports-related event contracts.

Coinbase argued that federal commodities law gives the Commodity Futures Trading Commission (CFTC) exclusive authority over prediction markets. The company also claimed Michigan's gambling laws conflict with the federal Commodity Exchange Act (CEA).

Kumar rejected those arguments at the preliminary injunction stage. She found that Coinbase had not shown a strong likelihood of succeeding on its claims.

The decision adds to a growing legal battle between prediction market operators and state regulators. It could also affect how platforms compete with traditional US online sportsbooks.

Why Judge Shalina Kumar rejected Coinbase's Injunction Request

Kumar found that Coinbase failed to establish that its sports event contracts qualify as swaps under the CEA. The company had argued that federal law therefore preempted Michigan's gambling regulations.

The judge also rejected Coinbase's argument that it could not comply with both federal and state requirements.

Kumar delivered a particularly sharp assessment of Coinbase's arguments in her ruling.

"Coinbase's averments are, in a word, applesauce," says Kumar in her ruling.

She also rejected Coinbase's argument that Congress intended to create a completely uniform federal market.

"For one, Coinbase's contention that Congress endeavored to bring uniformity to futures markets through the CEA is not, as discussed in the previous section, enough to demonstrate that Congress therefore intended to completely preempt state gambling laws from tangentially regulating purported swaps."

Kumar then addressed Coinbase's claim that complying with Michigan's Lawful Sports Betting Act would conflict with federal law.

"For another thing, it is not impossible for Coinbase to comply with the LSBA simply because it is costly and challenging," continues Kumar. 

"Even if Coinbase is correct that the LSBA and CEA use different methods of enforcement – and it is not clear that is the case – enforcement of the LSBA still does not stand as an obstacle to the objectives of the CEA."

The ruling therefore leaves Michigan's gambling authority intact while the broader lawsuit continues.

Coinbase sued Michigan in December 2025 after entering the prediction market sector. The company sought to provide customers access to event contracts offered through Kalshi.

Coinbase argued that federal law protects those contracts from state gambling regulation. Michigan, meanwhile, maintains that sports event contracts function as sports wagers.

What the Ruling Means for Coinbase

The ruling does not end Coinbase's lawsuit against Michigan. Instead, it denies the immediate protection Coinbase sought through its preliminary injunction motion.

The company can continue pursuing its broader federal preemption arguments. It could also seek appellate review of the injunction decision.

For now, though, Michigan retains the ability to enforce its gambling laws against Coinbase's sports event contracts.

The decision also creates another obstacle for Coinbase's prediction market expansion. The company has argued that state restrictions could create a fragmented regulatory environment.

That could force prediction market platforms to apply different rules across individual states. Traditional US online sportsbooks already operate under state-specific licensing and regulatory frameworks.

Coinbase maintains that prediction markets operate differently from sportsbooks. Its legal position centers on the claim that event contracts represent federally regulated financial products.

The Michigan court has not accepted that argument at this stage.

Moreover, the ruling also adds to an increasingly divided national legal landscape. A federal appeals court previously sided with Kalshi in New Jersey over similar federal preemption arguments.

Michigan courts have taken a different approach.

Regulators continue targeting sports prediction markets

Michigan gambling regulators have consistently treated sports prediction markets as gambling products when they involve sports outcomes.

The Michigan Gaming Control Board has argued that platforms cannot avoid state oversight by labeling sports wagers as financial event contracts.

The state has already taken legal action against several prediction market operators.

Michigan Attorney General Dana Nessel sued Kalshi in March. The lawsuit alleged that Kalshi violated the Lawful Sports Betting Act by offering unlicensed online sports wagers.

The state later secured a temporary restraining order against Kalshi. That order barred the platform from offering or advertising internet sports betting to Michigan residents. It also required geolocation measures to prevent access from the state.

Michigan has also challenged Polymarket and Robinhood over their sports-related prediction contracts. In June, U.S. District Judge Paul Maloney denied preliminary injunction requests from both companies.

Maloney found that the companies had not shown their sports contracts qualified as federally protected swaps. He also rejected their federal preemption arguments.

Coinbase's latest defeat therefore fits into Michigan's broader effort to regulate prediction markets through existing gambling laws.

The state's position could have significant consequences for the expanding prediction market industry. Sports contracts remain a major source of activity for platforms such as Kalshi and Polymarket.

For now, Michigan regulators continue to treat those products as sports wagering. Coinbase's latest court loss strengthens that position within the state, although the wider national dispute remains unresolved.

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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