Coinbase Sues Connecticut, Michigan, Illinois Over Regulation of Prediction Markets
Coinbase has filed federal lawsuits in the states of Connecticut, Michigan, and Illinois challenging state-level attempts to block prediction markets. The company argues that these markets fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), not state gaming regulators. Coinbase seeks declaratory and injunctive relief to prevent these states from blocking or regulating prediction markets ahead of its planned January 2026 launch of CFTC-regulated event contracts through Kalshi. In this arrangement, Coinbase will act as an intermediary providing access to Kalshi's exchange.
The Illinois Gaming Board had previously issued cease-and-desist letters in April to Kalshi, Robinhood, and Crypto.com concerning sports event contracts, claiming such offerings violate state law. The board also warned in October that participating without a license constitutes illegal gambling. Coinbase contends that Congress excluded only specific commodities from CFTC jurisdiction, thereby implying that sports-related prediction markets should be regulated federally rather than by states.
The company argues that Illinois enforcement actions could force Coinbase to restrict access to Illinois residents only, which would conflict with federal rules designed to ensure impartial, nationwide access to a designated contract market. Kalshi, which will power these contracts, was valued at approximately $11 billion following a $1 billion funding round in November 2025, reflecting growing market interest as Coinbase prepares for its January launch.
