Detroit Backs Michigan Against Coinbase Prediction Markets
What to Know
- Detroit lawyers have until April 3 to file an amicus brief backing Michigan in its Coinbase lawsuit
- Coinbase sued Michigan, Connecticut, and Illinois in December 2025, arguing prediction markets belong under CFTC jurisdiction, not state gambling laws
- Detroit casinos generated over $200 million in revenue in January–February 2026, giving the city a direct financial stake in this legal battle
- The dispute could eventually reach the US Supreme Court, per legal experts, echoing the 2018 Murphy v. NCAA sports gambling ruling
The Coinbase prediction markets lawsuit in Michigan just got a new participant — and it's not hard to figure out why Detroit wants in. US District Judge Shalina Kumar approved an order on Thursday allowing the city of Detroit to file an amicus brief supporting Michigan state authorities, giving city lawyers until April 3 to submit the filing in the US District Court for the Eastern District of Michigan.
Why Detroit Is Backing Michigan Against Coinbase
Follow the money. Detroit casinos pulled in more than $200 million in combined revenue during January and February 2026, delivering over $24 million in taxes to Michigan's coffers. When a major crypto exchange starts offering event-contract betting from a smartphone — no casino floor required — Detroit's gaming industry has something concrete to lose.
Coinbase filed its Coinbase lawsuit Michigan in December 2025, targeting Michigan alongside gaming regulators in Connecticut and Illinois — more than a month before publicly announcing the Coinbase prediction markets launch on its platform. The argument is straightforward: prediction markets are event contracts governed by the CFTC, not state gambling commissions. States, Coinbase contends, have no jurisdiction here.
Does the CFTC Have Jurisdiction Over Prediction Markets?
That's the central question — and there's no clean answer yet. CFTC Chair Michael Selig has proposed new rules for CFTC prediction markets regulation, signaling the commission wants a comprehensive framework around event contracts. But proposed rules aren't law, and state regulators aren't waiting.
Stephen Piepgrass, a partner at Troutman Pepper Locke, told reporters that the more regulatory weight the CFTC throws behind a coherent framework, the harder it becomes for courts to side with states — specifically on whether prediction markets are genuine financial instruments or a workaround for sports gambling bans.
The broader landscape is a mess. Kalshi was ordered by a Nevada judge to temporarily halt operations this month and faces criminal charges in Arizona. A Tennessee judge, meanwhile, blocked state authorities from enforcing gambling laws against the platform back in February. No consistent legal standard has emerged — which is exactly why Piepgrass thinks this chain of cases could end up at the US Supreme Court, echoing the 2018 Murphy v. NCAA ruling that gave states authority over sports gambling. You can track the CFTC's evolving posture on CFTC guidance on prediction markets and how prediction markets surged during volatile events despite mounting legal pressure.
Detroit's amicus filing adds political weight to Michigan's side and puts another major US city on record against crypto platforms entering gambling territory without state-level approval. Coinbase, which has been expanding its ambitions aggressively across product categories, filed lawsuits against three states before even announcing the product — a proactive legal offense that forced regulators to come to court rather than the other way around.
The more the CFTC can do in this space to put a comprehensive regulatory regime around it, the more likely it is for courts who are looking at the issue to say 'actually, yes, this is a CFTC jurisdiction issue — this really is not just an end run around sports gambling bans in particular states.'
— Stephen Piepgrass, Partner, Troutman Pepper Locke
Frequently Asked Questions
What is the Coinbase prediction markets lawsuit in Michigan about?
Coinbase filed a lawsuit against Michigan in December 2025 arguing that prediction markets — where users bet on real-world events — fall under federal CFTC jurisdiction, not state gambling laws. Michigan regulators disagree, and the case is before the US District Court for the Eastern District of Michigan.
Why is Detroit filing an amicus brief in this case?
Detroit casinos generated over $200 million in revenue during January and February 2026, contributing $24 million in state taxes. The city has a direct financial interest in limiting competition from crypto-based prediction markets, which offer event-based betting without requiring state casino licensing.
Could the Coinbase vs. Michigan case reach the Supreme Court?
Legal experts believe it's possible. The 2018 Murphy v. NCAA ruling gave states authority to regulate sports gambling, and states are using it as precedent. If lower courts produce conflicting rulings across jurisdictions, the Supreme Court may need to resolve whether the CFTC or states hold primary authority over prediction markets.
What is the CFTC's position on prediction markets regulation?
CFTC Chair Michael Selig has proposed new rules for prediction markets, signaling the commission wants a comprehensive regulatory framework for event contracts. Those rules are still pending, leaving courts to navigate the federal-vs-state jurisdiction question without finalized federal guidance.
This article is for informational purposes only and does not constitute investment advice. Every investment and trading decision involves risk. Readers should conduct their own research before making any financial decisions.
Topics
Coinbase prediction marketsCoinbase lawsuit MichiganCFTC prediction markets regulationDetroit amicus briefMichigan gaming lawprediction markets gambling regulationMilan Torres
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Milan covers Bitcoin markets, macro trends, and institutional crypto adoption with a focus on data-driven analysis.
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