Coinbase Sues Three States Over Prediction Market Regulation
Coinbase has filed federal lawsuits in Connecticut, Michigan, and Illinois, challenging state efforts to regulate or block prediction markets. The company argues that these markets fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), not state gaming boards, and that state interference stifles innovation and violates federal law. The legal action follows cease-and-desist threats from the Illinois Gaming Board against Kalshi, Robinhood, and Crypto.com, alleging unlicensed sports wagering. Coinbase plans to launch prediction markets in January 2026 via a partnership with Kalshi, a CFTC-registered exchange, enabling customers to trade event contracts on topics like sports and politics. As a CFTC-regulated futures commission merchant, Coinbase will act as an intermediary for users accessing Kalshi’s platform. The company warns that state restrictions would force it to limit access and undermine its compliance reputation, contradicting federal requirements for open trader access. The prediction market sector has grown rapidly, attracting leading exchanges, and 2026 is viewed as a critical year for its future growth and regulatory clarity.
