Coinbase sues 3 U.S. states over prediction markets

Core Viewpoint - Coinbase is challenging the authority of state gambling laws by filing lawsuits against Connecticut, Illinois, and Michigan, asserting that federally regulated prediction markets should fall under the jurisdiction of the CFTC rather than state regulations [1][2][3]. Group 1: Legal Actions - Coinbase has initiated lawsuits in three U.S. states to seek federal protection for its prediction markets, arguing that these markets are financial derivatives rather than gambling products [2][3]. - The lawsuits request federal judges to affirm that prediction markets on a CFTC-regulated platform are governed by the Commodity Exchange Act (CEA) and not by individual state gambling codes [3][4]. Group 2: Federalism Argument - Coinbase's legal filings present the issue as both structural and statutory, claiming that allowing states to independently regulate prediction markets could undermine the federal system by enabling the most restrictive state laws to dictate national rules [4]. - The company references the Commodity Exchange Act, which broadly defines "commodity" and excludes only a few specific items, arguing that the absence of exclusions for sports or politics indicates Congress intended for such event contracts to be federally regulated [4]. Group 3: Distinction from Traditional Gambling - Coinbase's chief legal officer emphasizes the difference between its prediction markets and traditional sportsbooks, stating that while casinos profit from customer losses, prediction markets serve as neutral platforms that match buyers and sellers without bias towards outcomes [5].