Coinbase (COIN) Stock: Exchange Files Lawsuits Against Three States Over Prediction Markets

TLDR

• Coinbase (COIN) filed lawsuits against Michigan, Illinois, and Connecticut over their attempts to regulate prediction markets
• The crypto exchange argues these states lack legal authority to regulate prediction markets, which falls under federal CFTC jurisdiction
• The legal action comes one day after Coinbase announced its entry into the prediction market business through integration with Kalshi
• Other companies like Kalshi, Robinhood, and Crypto.com have faced similar state-level litigation over prediction markets
• The Supreme Court may address the federal versus state jurisdiction dispute in 2026

Coinbase just launched lawsuits against three US states. The company filed legal action against Michigan, Illinois, and Connecticut on Thursday.

The suits challenge state attempts to regulate prediction markets. Coinbase wants court orders protecting federal oversight of these platforms.

The timing isn’t random. Coinbase announced its prediction market entry just one day before filing the lawsuits.

Coinbase Global, Inc., COIN

The company is partnering with Kalshi for this new venture. The integration allows Coinbase users to bet on various event outcomes.

The Jurisdiction Battle

The core issue is simple. States and casinos want local control through gambling laws.

Prediction market operators want federal oversight instead. They argue the CFTC already has exclusive jurisdiction.

Paul Grewal leads Coinbase’s legal team. He frames the suits as seeking confirmation of existing law.

The legal landscape remains messy. Various courts have issued contradictory rulings on the matter.

Bloomberg Intelligence suggests the Supreme Court could weigh in next year. That decision would clarify the regulatory framework.

Growing Market Draws Competition

Prediction markets have exploded in the past year. These platforms let users bet on sports, elections, and other events.

Coinbase isn’t alone in facing state challenges. Kalshi has been fighting similar battles across multiple jurisdictions.

Robinhood Markets jumped into prediction markets too. Crypto.com also entered the space.

All three companies have dealt with state-level litigation. The regulatory confusion creates risks for any company in this sector.

Coinbase operates as the largest US crypto exchange. The prediction market move represents a diversification effort.

The company is offering its product through Kalshi’s platform. The non-exclusive partnership allows both companies to grow their user bases.

State agencies want gambling law oversight. Casino interests support state-level regulation.

Federal jurisdiction would create uniform rules nationwide. State control means navigating 50 different regulatory regimes.

Coinbase filed for court orders affirming CFTC jurisdiction. The company seeks protection from state interference before it faces enforcement actions.

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