Coinbase Exits Michigan Sports Markets as Appeals Continue

Coinbase Financial Markets Inc. has reached an agreement to cease offering new sports-event contracts to Michigan customers and close existing positions by midnight Saturday, according to the Michigan Gaming Control Board. This agreement allows the company a deadline to comply with state regulators' demands. In exchange for complying, Michigan will refrain from taking enforcement action while Coinbase completes the wind-down process and the ongoing appeals continue.

The stipulation applies to sports-related event contracts traded on Kalshi and other designated contract markets. Coinbase must cease offering new contracts in Michigan and close out any open customer positions by the deadline. However, the agreement does not resolve the broader dispute over whether Michigan can regulate these event contracts as gambling.

The Michigan Gaming Control Board's announcement preserves both parties' rights, obligations, and defenses pending a final ruling from the Sixth Circuit or the U.S. Supreme Court. The agreement also aligns with Michigan's efforts to restrict sports-event contracts offered to residents, following similar actions against Robinhood Derivatives LLC and KalshiEX LLC.

A Michigan court order previously halted Kalshi's sports wagering operations, and Coinbase's activities in the state have drawn scrutiny over how the company manages these products. Michigan Attorney General Dana Nessel stated that the state aims to bring sports betting into compliance with its laws, whether through operator agreements or court-imposed restrictions.

The legal question remains unresolved as the settlement alters Coinbase's immediate operations in Michigan, but does not determine the state's ability to apply its gambling laws to CFTC-registered event contracts.