Coinbase has filed lawsuits in opposition to Illinois, Michigan, and Connecticut, whereas difficult state efforts to manage prediction markets and asking federal courts to make clear who has oversight authority.
In its filings, the crypto alternate is in search of declaratory and injunctive aid, arguing that prediction markets fall below the unique jurisdiction of the Commodity Futures Buying and selling Fee (CFTC) somewhat than state gaming regulators.
Who Controls Prediction Markets?
The corporate acknowledged that federal regulation already assigns regulatory authority for these merchandise to the CFTC, which leaves states with out the facility to limit or prohibit them below playing statutes. The lawsuits come as Coinbase prepares to enter the prediction markets house by way of a partnership with Kalshi, a CFTC-regulated platform, and plans to roll out event-based contract buying and selling throughout the US beginning in January 2026.
Coinbase warned in courtroom filings that state intervention might trigger speedy and “irreparable hurt” by blocking entry to federally regulated merchandise in sure jurisdictions. The corporate is responding to actions by a number of states which have sought to categorise occasion contracts, notably these linked to sports activities outcomes, as unlawful playing except operators acquire state-issued betting licenses.
Based on the crypto alternate, this interpretation conflicts with federal commodities regulation. The alternate stated that Congress granted the CFTC broad authority over derivatives and commodities, with solely a restricted set of exclusions that don’t embrace sporting occasions. As such, Coinbase added that sports-related occasion contracts stay topic to federal oversight.
The corporate has additionally highlighted the variations between prediction markets and conventional sportsbooks. Not like casinos, which set odds and revenue from buyer losses, prediction markets operate as impartial venues that match consumers and sellers with out taking directional threat.
Coinbase’s Chief Authorized Officer, Paul Grewal, tweeted
“We’re proper on the regulation and the info. And we are going to show it.”
The lawsuits arrive amid rising scrutiny from state regulators as prediction markets have surged in recognition. Platforms resembling Kalshi and Polymarket have generated billions of {dollars} in buying and selling quantity over the previous 12 months and have drawn elevated regulatory consideration consequently.
Earlier this month, Connecticut regulators issued cease-and-desist orders in opposition to a number of corporations providing event-based contracts, triggering authorized challenges and momentary pauses on enforcement.
Prediction Markets Increase
Regulatory woes apart, the sector has additionally seen contemporary momentum in 2025 from new product launches, reinforcing expectations of broader adoption. Robinhood CEO Vlad Tenev not too long ago predicted vital long-term progress for crypto-based prediction markets. The exec even described the sector as coming into the early phases of a “prediction market supercycle.”
Tenev stated adoption and buying and selling volumes might increase dramatically as platforms more and more value real-world occasions utilizing blockchain infrastructure.
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