Coinbase Financial Markets reached a deal with Michigan regulators to stop offering new sports-related event contracts to Michigan customers and to close all open positions by 12 a.m. ET on October 10, 2026. The agreement follows similar state actions involving Robinhood and Kalshi and is part of Michigan's broader effort to block prediction-market sports products it views as unlicensed wagering. The arrangement prevents immediate enforcement but does not decide whether state gambling law can apply to the federally registered contracts.
What Coinbase must do
Under the terms, Coinbase Financial Markets has to stop selling new sports-related event contracts in Michigan and wind down any customer positions that remain open before the midnight deadline. The state said the requirement covers contracts available through KalshiEX and other designated contract markets. In exchange, Michigan will not pursue enforcement action against Coinbase as long as the company follows the agreement, and that protection remains in place while appeals are pending before the U.S. Court of Appeals for the Sixth Circuit.
Michigan's rationale
Michigan regulators have said the platforms were presenting sports wagering products as federally regulated offerings without holding state gaming approval. State officials argue that event contracts tied to sports results fall under state gambling law and cannot be offered unless they meet Michigan's sports betting requirements. Attorney General Dana Nessel sued Kalshi in March 2026, alleging violations of the Lawful Sports Betting Act. The state has said it wants sports wagering in Michigan offered only through properly licensed and regulated operators.
The legal fight continues
The stipulation does not end the dispute. In August, Coinbase asked a court to block the state's action, but the judge said no, and the company turned to the Sixth Circuit for review. The Sixth Circuit has paused that appeal while it considers related cases involving Robinhood, Polymarket and Kalshi. The deal does not answer whether state law can treat CFTC-registered event contracts as gambling. Each side preserves its legal positions until a final decision from the Sixth Circuit or the U.S. Supreme Court.
Robinhood and Kalshi precedents
Earlier, Michigan reached an almost identical settlement with Robinhood Derivatives and won a preliminary injunction against Kalshi in state court. Coinbase introduced its prediction market exchange in January in partnership with Kalshi. Kalshi later stopped Michigan users from trading its sports event contracts after the state's challenge. MGCB Executive Director Henry Williams said the three companies' withdrawal from the sports contracts shows Michigan is enforcing its gaming laws, and that operators are pausing because continuing in the state would carry significant legal risk.
State-federal uncertainty
Coinbase and Kalshi maintain that the sports-related contracts are federally regulated financial products overseen by the Commodity Futures Trading Commission. Michigan argues that contracts tied to sports results remain subject to state sports betting laws. The outcome could determine whether prediction market platforms may offer sports event contracts nationally or must restrict access state by state. Other states have split: New York sued Kalshi in July 2026, while North Carolina passed a bill in July recognizing exclusive CFTC oversight of prediction market platforms.
Official comments
Williams stated that the companies are withdrawing from unlicensed sports contracts because continuing would expose them to serious legal penalties in Michigan. Nessel said the joint effort is sending a clear message to executives in the illegal sports betting industry, and she described Michigan gaming law as straightforward and designed to keep gambling fair and well-regulated. She added that whether by agreement or court order, the state intends to bring all sports betting into compliance with the law.
