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Michigan's federal court on Tuesday became the third to preliminarily determine that sports-event contracts are not "swaps" subject to CFTC exclusive jurisdiction.
In doing so, the state joins Nevada and Ohio as regulators fight to keep prediction markets out of their respective states.
"(An) Unnecessary lawsuit by Polymarket--there was no threat of enforcement--creates bad precedent for PMs in MI," remarked gaming attorney Daniel Wallach.
Michigan has been among the most protective of its regulated gaming market over the last two years, sending cease and desist letters to sweepstakes casinos and offshore betting sites alike. They are currently pursuing legal action against another prominent prediction market Kalshi in an effort to prevent it from offering sports-related event contracts without a state license
State authorities further contend that these companies operate as illegal, unregulated gambling.
The lawsuit, filed by Attorney General Dana Nessel, claims these markets violate the Lawful Sports Betting Act.
"Entities like Kalshi continue to circumvent the gaming prohibitions imposed by (state law) and, in so doing, threaten the health, safety, and welfare of Michigan citizens," the complaint states.
The Honorable Judge Paul Maloney noted that Polymarket's "broad reading of [the word] 'event' would also be contrary to legislative intent regarding the statute’s interaction with gambling and have wide-reaching consequences for other federal legislation not clearly spoken to in the legislative text."
Kalshi's CEO, Tarek Mansour, sat down with Bloomberg's Tim Stenovec at the FIA Global Cleared Markets conference in Boca Raton, Florida this week detailing why prediction markets are important to the overall trading ecosystem. Mansour insists his platform does not offer gambling.
Kalshi CEO Tarek Mansour says the company, an online prediction market, is committed to following the rule of law.
He speaks to Bloomberg's Tim Stenovec at the FIA Global Cleared Markets conference in Boca Raton, Florida https://t.co/C5zqPVxnNN pic.twitter.com/yT9z4n4GbY— Bloomberg TV (@BloombergTV) March 10, 2026
"There is Kalshi, US-based, committed to the rule of law, under (Joe) Biden, under (Donald) Trump, under any administration," he argues. "We will always be committed to this and we will be working with regulators for rule making.
"But there are others in this space who are based offshore that are doing - I honestly don't know what they are doing - like anything and everything under the sun.
"The way that we approach this is that we are focused on building a fair marketplace and the beauty, the blessing and the curse of prediction markets is that, when there is suspicious activity, you all see it and you report on it. It's right there on the chart. It's out there in the open. All the trading activity is public. And you see the weird patterns."
Since the start of the US and Israel Iran conflict, millions of dollars have been traded on prediction markets.
Polymarket is facing scrutiny over allegations of insider trading after bettors made more than 500 million dollars by accurately predicting the date (and time) of the first strikes on Iran.
One newly created account on Polymarket made more than a quarter of a million US dollars betting on the strikes, the user's profile on the website shows.
Bets being placed on the conflict, which has now impacted around a dozen countries in the region, are now coming under intense criticism for being in poor taste.
From CNBC:
Over the weekend, the company’s founder and CEO, Shayne Coplan, was asked about some of the broader controversy regarding prediction markets concerning geopolitical conflicts like Iran at the MIT Sloan Sports Analytics Conference.
Coplan said it was a “complicated question,” but said that prediction markets serve a powerful informational function and value proposition, including in war zones.
He also dismissed some of the criticism as “more money, more problems.” “There’s still a lot of resistance to innovation that kind of seems jarring to begin with ... that’s what makes it innovative and disruptive,” he said.
Polymarket also recently archived markets that had allowed bets on the timing of a nuclear detonation, after the contracts attracted hundreds of thousands of dollars and some public backlash.
- Alejandro Botticelli, Gambling911.com
