The city of Detroit will file a legal brief supporting Michigan state authorities in their lawsuit against Coinbase over prediction markets. The exchange argues federal regulators, not states, should oversee these markets, initiating a legal clash that could reach the Supreme Court.
Lawyers representing the US city of Detroit plan to file an amicus brief in Coinbase‘s lawsuit against Michigan. The brief will support state officials who argue they have authority over prediction markets, not federal regulators. A district judge approved the order allowing Detroit to file by April 3.
Coinbase filed its lawsuit against Michigan, Connecticut, and Illinois in December. The company claims prediction markets fall under the purview of the US Commodity Futures Trading Commission (CFTC) rather than state gambling regulators. Companies like Coinbase, Kalshi, and Polymarket face similar state-level lawsuits in multiple jurisdictions.
CFTC Chair Michael Selig has proposed new rules for the commission to support these platforms. Stephen Piepgrass, a partner at law firm Troutman Pepper Locke, stated “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.” The cases could ultimately reach the US Supreme Court, referencing its 2018 decision in Murphy v. National Collegiate Athletic Association.
US courts have sided with platforms in some cases, like a Tennessee judge blocking enforcement against Kalshi in February. However, a judge ordered Kalshi to temporarily stop operating in Nevada this month, and the platform faces criminal charges in Arizona. According to data generated by the Michigan Gaming Control Board, Detroit casinos provided more than $24 million in taxes for the state in January and February.
