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Coinbase Financial Markets has agreed to stop offering sports event contracts in Michigan, the Michigan Gaming Control Board announced Oct. 7. Coinbase must stop listing new sports-related contracts for Michigan customers by 12 a.m. Eastern time Saturday, Oct. 10, and close all remaining customer positions by that deadline.
The restriction covers contracts traded on KalshiEX and other designated contract markets.
In return, Michigan will not take enforcement action against Coinbase as long as the company complies and while related appeals proceed before the 6th US Circuit Court of Appeals.
The agreement does not settle the underlying dispute. A court denied Coinbase’s request for a preliminary injunction in August, and its appeal is on hold while the 6th Circuit considers related cases involving Robinhood, Polymarket and Kalshi. The stipulation preserves each side’s legal arguments.
Michigan’s crackdown now spans three prediction markets
Michigan regulators have spent much of the year challenging prediction markets tied to sporting events. State officials say the contracts are unlicensed sports betting that only licensed operators may offer under Michigan gaming law.
Coinbase now joins Robinhood, which reached a similar agreement in September, and Kalshi, which is under a state court preliminary injunction. Michigan has secured agreements or court orders from all three without a final ruling on the central legal question.
Henry Williams, the board’s executive director, said Coinbase’s decision shows operators understand the legal risks of continuing to offer the products. Attorney General Dana Nessel said her office will pursue compliance “whether by agreement or court order.” Both agencies said they will keep pursuing companies that offer sports wagering outside the state’s licensed market.
6th Circuit ruling tilts toward states
A separate ruling from the same appeals court adds weight to Michigan’s position. On Sept. 25, a 6th Circuit panel ruled in two lawsuits Kalshi filed against Ohio and Tennessee regulators.
The court found that Kalshi’s sports event contracts are not “swaps,” a type of derivative that falls under the Commodity Futures Trading Commission’s exclusive jurisdiction. It also held that even if they were swaps, the Commodity Exchange Act would not override state sports betting laws.
Kalshi said it disagrees with the decision. A company spokesperson said the ruling shows why a “state-by-state patchwork” doesn’t work.
Ohio has already moved to use the decision. The Ohio Casino Control Commission sent cease-and-desist letters Oct. 2 to 10 prediction market operators and brokers, including Coinbase and Robinhood. Each company has until Oct. 16 to confirm in writing that it has stopped offering sports event contracts to people in Ohio.
The letters warn that ignoring the demand could lead to administrative, civil, nuisance or criminal action. Andromeda Morrison, the commission’s interim executive director, said the ruling confirms that the contracts fall under Ohio’s gambling laws.
The 6th Circuit decision does not directly resolve the Michigan cases, but the same court is hearing them.
Supreme Court could settle the dispute
Federal appeals courts remain divided. The 6th Circuit joined the 9th Circuit, which ruled in August that Kalshi can be regulated under state gambling laws. In April, a divided 3rd Circuit panel ruled that federal law preempts New Jersey’s regulation of Kalshi’s sports event contracts. New Jersey has asked the US Supreme Court to review that decision, and the justices have not said whether they will take the case.
At the center of the Michigan dispute is whether the state may regulate sports event contracts listed on federally regulated exchanges as gambling. The Coinbase agreement stays in place pending a final ruling from the 6th Circuit or the Supreme Court.
