Michigan Judge Rejects Polymarket’s Injunction, Says Sports Contracts Fall Outside CFTC Oversight
Polymarket’s attempt to block Michigan regulators from acting against its prediction market has failed. In a ruling issued June 17, Judge Paul Maloney of the Western District of Michigan denied the company’s request for a preliminary injunction.
Polymarket, operating under QCX LLC, had argued that its contracts fall under CFTC jurisdiction and that Michigan’s enforcement would unlawfully intrude on federal authority.
Despite its arguments, the court found Polymarket had not shown a likelihood of success on the merits, a requirement for preliminary relief. Judge Maloney stressed that “a preliminary injunction is an extraordinary remedy” and that the company’s legal theory was too weak to justify such intervention.
Judge states that sports contracts don’t fall under swaps
At the center of the dispute was whether Polymarket’s sports‑event contracts should be treated as federally regulated “swaps” under the Commodity Exchange Act, or as gambling products subject to state law.
Polymarket filed suit in March against Michigan Attorney General Dana Nessel, Michigan Gaming Control Board Chair Jim Ananich, and other officials. The move came just days after Nessel launched a separate case against Kalshi, another prediction market operator.
In its filing, the company warned it was in “imminent and concrete danger” of state action and claimed, “The resulting harm would be irreparable. The chilling effect on lawful activity and the deprivation of Michigan residents’ access to a federally regulated exchange is precisely the harm Congress sought to prevent.” It insisted its contracts were lawful event contracts overseen by the CFTC and accused the state of “unlawful overreach.”
Judge Maloney on Wednesday explained that while derivatives and gambling may share similarities, Congress designed the “swap” definition in the Dodd‑Frank Act to address systemic risks in financial markets, not small‑scale consumer wagers.
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He noted that “rarely is the term ‘derivative’ popularly associated with something as mundane as the outcome of the Super Bowl or even sports gambling generally.” The court emphasized that without a clear statement from Congress, federal law cannot override the states’ traditional role in regulating gambling.
What comes next
The denial of the injunction does not end the case, but it leaves Polymarket exposed to possible enforcement in Michigan. The ruling signals that courts may be reluctant to extend federal derivatives law to sports prediction markets, especially when state gambling laws are at stake.
The Michigan ruling becomes Polymarket’s second loss in a US court in the last few weeks. Earlier this month, the Nevada Gaming Control Board (NGCB) secured a court order from Judge Woodbury in the state’s First Judicial District Court to shut down the prediction market operation within its borders. The NGCB had also seen similar victories against Kalshi and Coinbase.
Meanwhile, Polymarket continues its fight in Massachusetts, where it sued Attorney General Andrea Joy Campbell and the Massachusetts Gaming Commission in February after a preliminary injunction against Kalshi was obtained. It also sued Gov Tim Walz and Attorney General Keith Ellison in June after Minnesota became the first state to officially pass law banning prediction markets.
Kalshi and CFTC are also active in the fight between state regulators and prediction markets. With over a dozen states now in the mix and the CFTC even publishing new guidelines for these operators, the story is far from over and might likely make it all the way to the Supreme Court.
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