Odaily Planet Daily reports that Ryan VanGrack, Coinbase’s Vice President of Legal and Head of Global Litigation, stated that some U.S. state governments are misleading the public by misinterpreting federal laws in an attempt to expand state regulatory authority over prediction markets.
Following its recent collaboration with the prediction market platform Kalshi to launch related products, Coinbase has filed lawsuits in Connecticut, Illinois, Michigan, and Nevada. Regulators in these states previously issued cease-and-desist orders or warnings, asserting that sports event contracts constitute illegal gambling. VanGrack stated that these actions pose a “real and imminent threat” to users, prompting Coinbase to seek a federal court ruling.
VanGrack noted that the U.S. Commodity Exchange Act explicitly grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over derivatives markets, and that prediction market products, including event contracts, fall under federal regulation. He argued that states’ attempts to exclude sports event contracts from the definition of derivatives lack legal basis.
VanGrack denied claims by some state governments that the market would lack oversight without state-level intervention, emphasizing that the CFTC has long regulated derivatives markets worth trillions of dollars and has already issued enforcement advisories on insider trading in event contracts.
Coinbase also noted that exchange-based prediction markets differ fundamentally from traditional sports betting. On regulated exchanges such as Kalshi, prices are determined by market participants, whereas traditional betting operators set odds and bet directly against customers.
VanGrack stated that states can still play a role in consumer protection and fraud prevention, but placing a national derivatives market under a "patchwork of 50 different regulatory agencies" would undermine market stability and investor confidence.