Coinbase has filed 3 lawsuits aiming to obtain judicial confirmation that prediction markets offered on federally supervised platforms fall outside the scope of state gambling laws.
In essence, the cases centre on whether such markets should be regulated exclusively by the US Commodity Futures Trading Commission (CFTC) under federal commodities law.
The legal action comes as Coinbase prepares to launch its own prediction markets and reflects a general dispute in the United States over whether so-called event contracts are financial derivatives or a form of wagering. Coinbase is asking federal courts in Connecticut, Illinois and Michigan to affirm that platforms overseen by the CFTC operate under the Commodity Exchange Act, rather than being subject to individual state gambling statutes.
Dispute over federal and state authority
In its court filings, Coinbase views the matter as a question of federal authority. The company argues that allowing each state to independently assess the legality of federally regulated prediction markets would enable the most restrictive jurisdictions to effectively set national policy. According to Coinbase, this would undermine the intended balance between federal and state oversight.
The exchange points to the Commodity Exchange Act’s definition of commodities, which includes only limited and explicit exclusions. Coinbase argues that because areas such as sports or political outcomes are not excluded, Congress intended these contracts to remain under federal supervision.
Coinbase officials have also distinguished prediction markets from traditional gambling operations. They argue that, unlike bookmakers or casinos, which set odds and benefit from customer losses, prediction markets function as neutral venues that match buyers and sellers without exposure to the outcome of events.
The legal strategy closely follows earlier efforts by Kalshi, another CFTC-regulated platform, which has faced enforcement actions from multiple state authorities. Courts have so far issued mixed rulings. While judges in some states have found that state gambling laws still apply, others have granted temporary relief while some legal questions are considered.
