Judge rejects Coinbase bid to bypass Michigan sports betting laws

The court found that Coinbase failed to demonstrate a likelihood of success on its claims that sports event contracts qualify as swaps under the Commodity Exchange Act. In a blunt assessment of the company’s legal theory, Judge Kumar dismissed the argument that compliance with both federal derivatives law and Michigan’s Lawful Sports Betting Act was impossible, labeling the assertion as “applesauce.”

This decision highlights a growing divide in federal courts regarding whether the Commodity Futures Trading Commission’s jurisdiction should override state authority. While the Third Circuit previously favored a similar argument brought by Kalshi in New Jersey, other district courts in Ohio and Michigan have remained skeptical of the industry’s preemption claims. Coinbase continues to argue that state restrictions stifle innovation, yet the Michigan ruling preserves the status quo, leaving the exchange exposed to state enforcement while the broader legal battle persists.