TL;DR
- Coinbase has appealed a Connecticut ruling over sports event contracts to the Second Circuit, arguing that the products are swaps governed by federal commodities law.
- The company says the CFTC has exclusive authority over federally regulated prediction markets.
- Connecticut argues the contracts are sports wagers, setting up a broader legal dispute over how digital prediction markets should operate in the United States.
Coinbase Financial Markets is asking the U.S. Court of Appeals for the Second Circuit to reverse an August 10 decision that denied its request for a preliminary injunction against Connecticut enforcement. The appellate case opened on August 17 as Coinbase Financial Markets, Inc. v. Tong, No. 26-2297.
Today we filed our opening brief in the Second Circuit Court of Appeals seeking to confirm the CFTC's exclusive jurisdiction to regulate prediction markets.
It's about who, not if. There's no debate around if prediction markets should be regulated. They should, and already are…
— Molly Abraham (@mollyisonchain) October 7, 2026
Coinbase Appeals Connecticut Ruling
Coinbase lawyer Molly Abraham said on October 8 that the company had filed its opening brief. Coinbase maintains that its sports event contracts fall within the Commodity Exchange Act and therefore come under the exclusive jurisdiction of the Commodity Futures Trading Commission. Connecticut argues instead that the products are sports wagers governed by state gambling rules.
Coinbase says its contracts are traded between counterparties through a CFTC-registered exchange, distinguishing them from conventional sportsbook bets.
Federal Rules Face State Gambling Laws
The appeal centers on whether sports event contracts qualify as “swaps” under the Commodity Exchange Act. Coinbase argues that the law covers contracts linked to events or contingencies with financial, economic or commercial consequences. It points to economic activity surrounding sports, including hotel demand and merchandise sales.
Coinbase also disputes the idea that a contract becomes a sports wager simply because its payout depends on an athletic result. If the contracts qualify as swaps traded on a federally regulated exchange, Coinbase says federal law should preempt Connecticut’s gambling restrictions.
The district court found that Coinbase had not shown a sufficient likelihood of proving that its contracts were swaps or that federal law preempted Connecticut’s rules. The Second Circuit will now consider the appeal.
The case arrives as U.S. courts reach different conclusions over sports prediction markets. On September 25, the Sixth Circuit ruled that Kalshi’s sports-event contracts were not swaps and that the Commodity Exchange Act did not preempt gambling laws in Ohio and Tennessee.
Coinbase also faces related disputes in other states. In Michigan, the company has agreed to stop offering new sports event contracts and close remaining positions by October 10 while related appeals continue. The Michigan arrangement is separate from the Connecticut litigation.
