Prediction Markets Hit Legal Walls in Michigan and Europe as the US Court Split Widens

In the space of a week, prediction markets ran into legal resistance on three fronts. A federal judge in Michigan ruled against Polymarket and Robinhood, nine European countries agreed to block the platforms during the World Cup, and a Wisconsin tribe sharpened its case against Kalshi. Each chips at the industry's core claim that its sports-event contracts are federally regulated financial products beyond the reach of state gambling law.

The Michigan opinion

US District Judge Paul Maloney, of the Western District of Michigan, denied preliminary-injunction requests from Polymarket and Robinhood in two near-identical opinions published June 17, finding both unlikely to win their challenge to Michigan's regulation of sports-event contracts. Polymarket had sued Michigan Attorney General Dana Nessel and Michigan Gaming Control Board chair Jim Ananich in early March, within 48 hours of Nessel suing Kalshi, arguing it faced "imminent and concrete danger" of enforcement that would violate its status as a federally authorized designated contract market.

Maloney rejected the central argument that the contracts are "swaps" under the Dodd-Frank Act and the Commodity Exchange Act, calling the statutory definition "ambiguous" and reading it against the presumption that Congress does not intrude on traditional areas of state authority. He devoted much of the opinions to Dodd-Frank's legislative history, concluding that Congress passed it to regulate over-the-counter derivatives after the 2008 financial crisis, not sports trading. "The primary issue it set out to solve had nothing to do with sports-related contracts," he wrote, adding that the markets Congress worried about "were dominated by large financial institutions and did not involve individuals staking relatively small amounts of money on the outcome of a football game."

He also found no clear preemption even if the contracts were swaps. Leaning on the Supreme Court's decision in Bond v. United States, Maloney wrote that "there is no clear statement that Congress intended to supersede the states' traditional role in regulating gambling," and that gambling regulation "lies at the heart of the state's police power." He warned that the plaintiffs' reading of "swap" was so broad it would "sweep in any agreement or transaction dependent on anything happening," reaching "contract law (service contracts), property law (mortgages), and family law (prenuptial agreements)." And he took direct aim at the Third Circuit's April decision for New Jersey-facing Kalshi, which had found sporting outcomes could carry economic consequences, saying the panel "did not explain what 'associated with' meant or articulate any limit on the chains of association." The ruling landed a week before Maloney was due to hear Michigan's bid to send a separate Kalshi case back to state court.

A widening court split

The Michigan and Third Circuit rulings now sit on opposite sides of a question fracturing the courts:

The federal government has taken the operators' side: the CFTC sued Arizona, Connecticut and Illinois in April 2026 to stop what it called unlawful state interference, and in March issued an advance notice of proposed rulemaking on how "gaming" and "sports competition" should be treated in event-contract listings. With panels splitting, the fight is widely expected to reach the Supreme Court, with analysts pointing to a likely resolution by June 2027 and prediction-market traders pricing roughly a 64% chance the court accepts a case by the end of 2026.

Tribes and Europe open more fronts

In Wisconsin, the Ho-Chunk Nation amended its complaint against Kalshi after US District Judge William Conley let its suit proceed but threw out its Lanham Act and racketeering claims. The tribe argues the contracts are sports betting in substance and that marketing them as legal on tribal land is deceptive, invoking the Indian Gaming Regulatory Act, under which tribes decide what Class III gaming runs on their land. Kalshi says its "50 States Legal" claim covers states, not tribal nations; Ho-Chunk counters that federally recognized tribes sit within some 35 states, so Indian lands cannot be carved out of those states. Wisconsin's own attempt to regulate the platforms drew pushback from the CFTC.

Europe moved as a bloc. Spain, France, Germany, Italy, Portugal, Belgium, the Netherlands, Poland and Switzerland signed a collective agreement to monitor and prevent prediction-market activity during the World Cup and to share intelligence on how the platforms target their populations. Kalshi and Polymarket are already effectively banned across all nine, with Belgium acting in early 2025, Germany later that year, France this year and Spain most recently. Spain's Consumo ministry, leading under its 2030 agenda, said the platforms "operate without the guarantees required by the regulations" and "may incorporate elements that favor problematic gambling behaviors." The nine also urged sports federations, leagues and clubs to vet their commercial partners. The exception on the continent is Gibraltar, which has licensed two platforms, ADI Predictstreet, an official World Cup partner, and WagerWire.

For operators and affiliates, the "federally regulated, legal everywhere" position prediction markets rely on is now contested across multiple US courts and walled off across Europe. The channel pulling volume from regulated sportsbooks is expanding into deeper legal uncertainty, and the operators feeding it, including DraftKings and FanDuel, are exposed to however the Supreme Court eventually rules.