Pullback of prediction markets spreads to Michigan, Connecticut and Missouri

Coinbase agreed to stop offering new sports-event contracts in Michigan before 10 October 2026 and to close all existing positions by that date, the Michigan Gaming Control Board said. The agreement lets Coinbase preserve its legal arguments in ongoing appeals while avoiding state enforcement so long as it complies with the agreed restrictions.

## Withdrawal in Michigan: who did what and when

Michigan has already secured agreements or rulings that halt sports contracts from Coinbase, Robinhood and Kalshi. The Michigan Gaming Control Board (MGCB) made the Coinbase agreement public after months of conflict between the company and state authorities; the MGCB is coordinating the state’s regulatory response to these offers and broader questions around [prediction markets](/regulation).

"Coinbase joining Robinhood and Kalshi in stepping back from these unlicensed sports contracts underscores Michigan’s commitment to enforcing its gaming laws," said Henry Williams, chief executive of the Michigan Gaming Control Board.

Coinbase sued Michigan regulators earlier this year, arguing its event contracts fall under the exclusive federal jurisdiction of the Commodity Futures Trading Commission (CFTC). A judge denied a motion for a preliminary injunction in August 2026. Coinbase’s appeal is pending before the Sixth Circuit Court of Appeals. The state agreement allows the legal dispute to continue in federal court while the company suspends new contract offers in the Michigan market.

Michigan, in turn, agreed not to initiate enforcement actions so long as Coinbase abides by the agreement’s terms and closes positions as stipulated.

## Connecticut steps up regulatory pressure on prediction markets

The Connecticut Department of Consumer Protection (DCP) said three of nine platforms that received cease-and-desist orders last month have already left the state. Webull, Gemini and ProphetX withdrew; Polymarket, Coinbase, Crypto.com, Robinhood, Novig and Underdog remain active in the Connecticut market.

"Our actions sent a clear message," said Bryan Cafferelli, commissioner of the Connecticut Department of Consumer Protection. "We will not tolerate illegal prediction market activity that preys upon the most vulnerable consumers. Three prediction market operators heard that message and are leaving our state accordingly. We are hopeful the rest will decide targeting Connecticut consumers isn't worth breaking the law."

Connecticut also sued Kalshi after the company challenged the state’s authority to regulate its sports-event contracts. Kalshi contends its contracts are federally regulated swaps; Connecticut treats them as sports betting subject to state gaming laws.

## Missouri: PrizePicks pauses sports markets and AG issues cease-and-desist letters

PrizePicks suspended its sports prediction markets in Missouri this week, telling customers the move responds to "updated legal requirements for prediction markets in Missouri." Existing entries will remain active and can be paid out, but no new wagers will be accepted in the state.

Missouri Attorney General Catherine Hanaway recently sent cease-and-desist letters to six companies: Kalshi, Polymarket, Robinhood, Underdog, Novig and Crypto.com. PrizePicks was not a recipient of those letters but chose to pause its offering in the state as a precaution.

## What these withdrawals mean for operators and the market

The coordinated actions by Michigan, Connecticut and Missouri show a pattern: state regulators are pressing platforms that offer contracts on sports outcomes without state licensing. The practical results are immediate and specific:

• - suspension of new-contract offers in particular state markets;

• - closure or blocking of open positions on set deadlines (for example, 10 October 2026 in Michigan for Coinbase);

• - issuance of cease-and-desist orders and civil lawsuits disputing whether contracts should be treated as federal swaps or as state-regulated bets.

For platforms this forces a choice: litigate in federal courts, negotiate exit agreements for specific markets, or adapt products to comply with state rules, a process that can generate significant legal and product costs.

## Legal implications: federal jurisdiction versus state gaming regulation

The core conflict across cases is how the contracts are classified. Coinbase and Kalshi have argued their products are swaps under the Commodity Futures Trading Commission’s jurisdiction; several states argue the same contracts are sports bets subject to state gaming regulation.

The denial of a preliminary injunction in the Coinbase case in August 2026 cleared the way for states to apply regulatory pressure while appeals proceed. Outcomes in federal courts, including the Sixth Circuit appeal, will be decisive for the future regulatory framework for these products.

## What operators and regulators should watch next

Operators should monitor three fronts: the progress of federal suits and appeals, state cease-and-desist activity, and executive decisions or settlements that require market closures or restrictions. State regulators have shown willingness to pursue the matter through litigation and to coordinate administrative penalties. Operators should also track developments that affect product design and market access in each jurisdiction.

For product and compliance teams this means preparing contingency plans that include rapid jurisdictional shutdowns, liquidation routes for open positions and coordinated legal strategies across states. Upcoming federal court rulings and states’ ability to sustain actions in court will determine whether prediction markets must be redesigned to fit state gaming frameworks or remain largely under federal oversight.

## Follow-up and context

The three state actions are part of a broader wave of scrutiny of prediction markets offering sports-related contracts in the United States. The Michigan, Connecticut and Missouri cases will be reference points for other states considering similar measures. I will continue coverage of these processes and update as new agreements, rulings or restrictions are announced on our [news](/news) section.

Renata Quiroga, betting markets correspondent, reports from the intersection of product and regulation.