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Michigan bettors won’t be able to use Polymarket after a federal judge ruled the state can enforce its gambling laws against the prediction market platform. The court rejected Polymarket’s argument that federal derivatives law shields it from state regulation, clearing the way for Michigan enforcement action.
Polymarket first filed a lawsuit in March. It resulted in US District Judge Paul L. Maloney ruling against the prediction market, not granting a temporary restraining order.
Prediction markets are not tied to the same regulatory structures of licensed Michigan sportsbooks, which has ignited a controversy not only in Michigan but across the country.
Maloney ruled in favor of the regulators once again.
Why the court sided with Michigan
Polymarket had argued that its products are federally regulated by the Commodity Futures Trading Commission (CFTC), which supersedes state gambling laws. It also contended that enforcement actions by Michigan officials threaten the company’s operations, as well as its customers.
Maloney ended up rejecting Polymarket’s argument, on both parts. He rejected Polymarket’s attempt to distinguish between swaps and sports wagering contracts:
“The term ‘swap’ would not have been understood by educated users of the language to include ‘sporting event contracts’ to the extent that that category could be separated from sports betting, and the CFTC did not use the term ‘swap’ that way before the passage of Dodd-Frank. Nor did it do so afterward.”
Maloney also ruled in favor of the state because the application of Michigan laws are constitutional, which makes it “difficult to portray” the harm Polymarket would face. He also took the side of the public, writing:
“Plaintiff’s potential losses to its business interests, even if irreparable, pale in comparison to the potential losses to the public if defendants are right on the merits.
“Because defendants have the better argument on the merits at this point, the risks it identifies are all the more acute in comparison. Plaintiff has thus not demonstrated that the non-merits factors are strongly in its favor, as it must when it is behind on the merits.”
What this means for Michigan players
The ruling puts Polymarket, along with Kalshi, in a bind because the courts are in favor of the current Michigan regulations. Neither prediction market is able to operate in the Great Lakes State.
That means Michigan players must remain with licensed sports wagering platforms, which is a win for the state in all regards. Sports wagering operators do not need to compete with prediction markets in Michigan, and regulators are able to uphold and enforce its gambling laws.
Michigan is one of the more aggressive states in targeting illegal and unlicensed wagering in the state. It’ll certainly continue to do so, especially if it has the support of the Michigan court system.
