Coinbase sues Michigan, Illinois and Connecticut over prediction market oversight

Coinbase has initiated lawsuits against Michigan, Illinois, and Connecticut, challenging state authority to regulate prediction markets. The company seeks court orders confirming that these markets fall exclusively under the jurisdiction of the Commodity Futures Trading Commission (CFTC), arguing that Congress designated the CFTC as the sole regulator, leaving states without authority to intervene. Coinbase's Chief Legal Officer, Paul Grewal, stated that state efforts stifle innovation and violate the law. The legal action follows Coinbase's announcement that it will enter the prediction markets sector via a partnership with Kalshi, a CFTC-regulated platform, planning to offer event-contract trading starting in January 2026. This move comes amid growing pushback from state authorities who argue that event-based contracts, especially those tied to sports, constitute illegal gambling unless licensed under state law. This dispute mirrors recent actions, such as Connecticut issuing cease-and-desist notices to Kalshi, which Kalshi is currently challenging in court.

(Source：The Block)