Coinbase Sues 3 States Over Prediction Market Laws
Coinbase has filed lawsuits against regulators in Connecticut, Illinois, and Michigan to assert that its planned prediction markets should be governed by the federal Commodity Exchange Act (CEA) and CFTC oversight, not state-level gambling laws. The company argues that prediction markets on federally regulated platforms fall under CFTC jurisdiction, and subjecting them to 50 different state gambling codes would undermine federalism by imposing the strictest state’s rules nationwide. Coinbase stresses that prediction markets differ from traditional gambling, as they act as neutral matching engines, not profit-seeking bookmakers. The company references congressional intent in specifying which commodities are excluded from the CEA, noting prediction markets were not among them. The case echoes ongoing legal battles faced by Kalshi, another CFTC-regulated platform, which has seen mixed results in federal and state courts over whether its event contracts are financial instruments or gambling. The outcome of these cases could clarify whether US prediction markets are treated as federally regulated derivatives or subject to state gambling restrictions.
