Michigan Judge Rejects Polymarket Bid to Block Sports-Betting Enforcement

Prediction markets let users trade event contracts tied to sports, elections, weather and other outcomes. The core legal dispute is whether those products are gambling subject to state control or derivatives governed by the federal Commodity Exchange Act. Minnesota became the first U.S. state to enact an outright ban, escalating a nationwide jurisdictional fight between state gaming authorities and the Commodity Futures Trading Commission, which says it has exclusive oversight of swaps listed by federally regulated exchanges including Kalshi and Polymarket US.

U.S. District Judge Katherine Menendez on July 27 issued a preliminary injunction blocking Minnesota’s law days before its Aug. 1 effective date. The measure would make operating or assisting a prediction market a felony. Menendez said the CFTC, Kalshi and Polymarket were likely to succeed in showing that the Commodity Exchange Act preempts the statute for many event contracts, while enforcement would cause irreparable harm. The order remains in place until a final ruling on the merits, giving the platforms and federal regulator an interim victory.

Kalshi and Polymarket allow users to trade contracts tied to game outcomes, point spreads and player statistics. The dispute centers on whether these products are derivatives subject exclusively to oversight by the U.S. Commodity Futures Trading Commission, or must also comply with state gambling laws. Kentucky separately enacted legislation in April 2026 imposing a 14.25% tax on platform trading fees, above the 9.75% rate on racetrack wagers.

On June 17, 2026, Kentucky Attorney General Russell Coleman sued Kalshi, Polymarket and their partners Coinbase, Robinhood and Webull in Franklin Circuit Court, alleging that they offered sports betting without licenses and failed to provide support for problem gambling. The state described the two platforms as multibillion-dollar businesses. The case puts the Trump administration, which supports exclusive federal oversight, in direct conflict with a Republican-led state government.

Kalshi and Polymarket offer event contracts tied to sports, elections and other outcomes. They argue that the Commodity Exchange Act gives the U.S. Commodity Futures Trading Commission, or CFTC, exclusive jurisdiction over such products, while the Nevada Gaming Control Board considers them unlicensed gambling. The dispute will determine whether states can restrict federally regulated prediction markets and could set a nationwide enforcement precedent.

Nevada regulators issued a cease-and-desist order to Kalshi in March 2025. On March 2 and 3, 2026, federal courts remanded the cases involving Polymarket parent Blockratize and Kalshi to state court. On March 19, the Ninth Circuit Court of Appeals declined to stay enforcement, and the following day a state court issued a 14-day temporary restraining order covering contracts tied to sports, elections and entertainment.