Lawyers representing the city of Detroit are preparing to file an amicus brief in support of Michigan state authorities in their ongoing legal dispute with Coinbase. District Judge Shalina Kumar of the US District Court for the Eastern District of Michigan approved an order permitting Detroit to submit the brief, setting an April 3 deadline for the filing. The decision came as part of a Thursday ruling related to state officials’ motion for a preliminary injunction.
Coinbase filed its lawsuit against Michigan in December, along with separate actions targeting gaming authorities in Connecticut and Illinois. The filings came more than a month before the crypto exchange publicly announced the launch of prediction market services on its platform. The central argument put forward by Coinbase is that prediction markets fall under federal jurisdiction, specifically that of the US Commodity Futures Trading Commission (CFTC), rather than state-level gambling regulators.
The dispute is part of a broader national conflict between state authorities and companies operating prediction market platforms. Coinbase, Kalshi, and Polymarket all face state-level legal challenges across multiple jurisdictions. CFTC Chair Michael Selig has proposed new rules that would expand the commission’s oversight role in this space, though the outcome of the broader legal battle between state and federal regulators remained uncertain as of Friday.
Legal experts suggest the stakes are significant. Stephen Piepgrass, a partner at international law firm Troutman Pepper Locke, told Cointelegraph that stronger CFTC rulemaking could influence how courts interpret jurisdictional questions. He noted that a more comprehensive federal regulatory framework would make it more likely for courts to conclude that prediction markets fall under CFTC authority rather than constituting an attempt to circumvent state sports gambling bans.
Piepgrass also indicated that the cases could eventually reach the US Supreme Court, pointing to its 2018 ruling in Murphy v. National Collegiate Athletic Association. That decision granted US states the authority to regulate sports gambling by striking down a federal law that had sought to prohibit such activity. The precedent could prove relevant as courts weigh the division of authority over prediction markets.
Court outcomes so far have been mixed for the platforms involved. A judge this month ordered Kalshi to temporarily halt operations in Nevada, and the company faces criminal charges in Arizona related to alleged illegal gambling on sports and elections. In contrast, a judge in Tennessee blocked state authorities from enforcing gambling laws against Kalshi in February, illustrating the inconsistent legal landscape across states.
Detroit’s interest in the case carries a financial dimension as well. The Michigan Gaming Control Board reported that Detroit-based casinos generated more than $200 million in revenue during January and February, contributing over $24 million in taxes to the state. The city’s involvement in the lawsuit underscores the economic stakes tied to how gambling and prediction market activities are ultimately regulated.
Originally reported by CoinTelegraph.
