Coinbase Files Lawsuits Challenging States’ Efforts to Control Prediction Markets

Coinbase filed lawsuits in Connecticut, Michigan and Illinois, challenging each state’s efforts to control or block prediction markets.

Paul Grewal, chief legal officer at Coinbase, said in a Thursday (Dec. 18) post on social platform X that the lawsuits will confirm that “prediction markets fall squarely under the jurisdiction of the [Commodity Futures Trading Commission], not any individual state gaming regulator (let alone 50).”

Today @coinbase filed lawsuits in CT, MI, and IL to confirm what is clear: prediction markets fall squarely under the jurisdiction of the @CFTC, not any individual state gaming regulator (let alone 50). State efforts to control or outright block these markets stifle innovation…

— paulgrewal.eth (@iampaulgrewal) December 19, 2025

In another post, Grewal said: “Some states think prediction markets fall outside the CFTC’s jurisdiction when they relate to sports. But Congress deliberately chose to exclude only a handful of specific underliers—including ‘onions’ and ‘motion picture box office receipts’—from the definition of ‘commodity.’ This makes clear that all other subjects (including sporting events) fall within the CFTC’s scope.”

Some states think prediction markets fall outside the CFTC’s jurisdiction when they relate to sports. But Congress deliberately chose to exclude only a handful of specific underliers—including “onions” and “motion picture box office receipts”—from the definition of “commodity.”…

— paulgrewal.eth (@iampaulgrewal) December 19, 2025

PYMNTS reported Dec. 11 that prediction markets are the latest flash point between federal and state regulators. Real-time prediction markets technically fall under the jurisdiction of the CFTC, but a growing number of states have sought to shut down the markets they view as unlicensed or illegal gambling operations.

Fueling the controversy is the explosive growth in online prediction markets and the flow of venture capital money into the industry. Total trading volumes exceeded $28 billion globally in 2025, with weekly peaks of $2 billion, and the largest market, Kalshi, is valued at $11 billion.

Coinbase announced Wednesday (Dec. 17) that it would begin to allow access to prediction markets in the United States, starting with Kalshi.

“You will soon be able to trade on the outcomes of real-world events like elections, sports, collectibles and economic indicators, with prices of the event contracts determined by the collective trading activity of market participants,” the company wrote in a blog post. “All market flow will come from Kalshi at launch.”

Coinbase said that users can manage their prediction market positions alongside existing crypto, equities and cash balances, and that the company plans to support contracts from other prediction market platforms in the months ahead.

In other moves made this month, Polymarket began rolling out its prediction market app in the U.S., Gemini Space Station affiliate Gemini Titan made its prediction markets platform available in the U.S., and DraftKings entered prediction markets with a new standalone app and web product.