Coinbase Sues Illinois, Michigan & Connecticut To Defend Sports Contracts
Coinbase filed suit against Illinois, Connecticut and Michigan gaming regulators (and attorney generals) on Thursday, joining the nationwide fight to defend sports event contracts.
Today @coinbase filed lawsuits in CT, MI, and IL to confirm what is clear: prediction markets fall squarely under the jurisdiction of the @CFTC, not any individual state gaming regulator (let alone 50). State efforts to control or outright block these markets stifle innovation…
— paulgrewal.eth (@iampaulgrewal) December 19, 2025
The main argument in the complaints is similar to that which Kalshi, Robinhood and Crypto.com have leaned on in their ongoing cases against states, namely that event contracts (including sports) are derivatives markets that fall under the sole jurisdiction of the CFTC, not the states, per regulations set forth by the Commodity Exchange Act. As Coinbase Chief Legal Counsel Paul Grewal noted in his tweet:
“Some states think prediction markets fall outside the CFTC’s jurisdiction when they relate to sports. But Congress deliberately chose to exclude only a handful of specific underliers—including ‘onions’ and ‘motion picture box office receipts’—from the definition of ‘commodity.’ This makes clear that all other subjects (including sporting events) fall within the CFTC’s scope.”
He added: “We’re right on the law and the facts. And we will prove it.”
Coinbase joins legal fight to defend sports contracts
All three of the states Coinbase is taking aim at offer regulated online gaming, including legal sports betting. They have also all been proactive in their efforts to block regulated exchanges from offering prediction markets on sports in their jurisdictions.
Those efforts have involved a number of actions including sending cease-and-desist letters to specific exchanges like Kalshi, Robinhood and Crypto.com, as well as issuing warnings to regulated operators that entry into prediction markets could threaten state gaming licenses.
While Kalshi and Robinhood continue their ongoing court battles, Coinbase joins in on the offensive. While Coinbase does not yet offer a prediction market product, the massive crypto exchange has plans to launch event contracts routed through Kalshi in January 2026, they recently announced.
As Kalshi and others have argued, Coinbase is claiming that blocking their sports event contracts in these states would constitute irreparable harm to the company. According to the complaint filed in Illinois:
“Absent this Court’s intervention, Coinbase will suffer multiple species of immediate and irreparable harm from Defendants’ attempts to intrude on this federal sphere. Declaratory and injunctive relief is warranted.”
Strength in numbers as prediction exchanges unite
Prediction market exchanges are beginning to show a united front in their efforts to defend the existence of sports prediction markets under the umbrella of federally-regulated derivatives.
Kalshi co-founder and CEO Tarek Mansour responded to Grewal’s lawsuit announcement thread with a handshake emoji, signaling alliance.
Coinbase and Kalshi, along with Crypto.com, Robinhood and Underdog, also recently joined forces to form an industry trade group, the Coalition for Prediction Markets. The group aims to provide a “unified industry voice,” focusing initially on “reinforcing the federal framework governing prediction markets,” as state gaming regulators continue to push back on sports contracts.
Meanwhile, prediction market offerings including those on sports continue to expand their reach, with Phantom Wallet, Gemini and DraftKings launching their prediction market products in the past week. In the same period, Kalshi has expanded its “combos” markets, the exchange version of parlays, to include NHL markets, as Robinhood began offering Kalshi single-game NFL combos on its own platform.