Coinbase Challenges State Attempts to Regulate Prediction Markets in Three States
Coinbase has filed lawsuits in Connecticut, Michigan, and Illinois in response to state efforts to regulate prediction markets. The company argues that prediction markets are under the jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC) rather than individual state gaming regulators. This position was outlined by Coinbase's Chief Legal Officer Paul Grewal on the social platform X.
Illinois's filing is dated December 18, with similar actions also taken in Connecticut and Michigan as part of the coordinated lawsuits. State regulators have claimed that prediction markets constitute gambling and have attempted to block these services. In contrast, Coinbase maintains that these markets function as derivatives and neutral exchanges.
Grewal noted that Congress specifically excluded certain underlyings from the commodity definition, which leaves the remainder under the exclusive purview of the CFTC. Through these lawsuits, Coinbase seeks to prevent states from applying gambling laws to transactions that are federally regulated and fall under the exclusive jurisdiction of the CFTC. Coinbase also plans to introduce prediction markets to its platform, initially by integrating with Kalshi.
