Polymarket attempt to block Michigan regulators from acting against its prediction market has failed in federal court.
In a definitive ruling issued June 17 2026 Judge Paul Maloney of the Western District of Michigan denied the company request for a preliminary injunction. Polymarket operates legally under the corporate name QCX LLC. The company had argued that its specific event contracts fall under CFTC jurisdiction. They claimed that state enforcement would unlawfully intrude on federal authority.
Despite these elaborate corporate arguments the court found Polymarket had not shown a likelihood of success on the merits. This metric serves as a primary requirement for preliminary relief. Judge Maloney stressed that a preliminary injunction is an extraordinary remedy. He concluded that the legal theory of the company was too weak to justify federal intervention.
Commodity Exchange Act Versus State Gambling Law
At the absolute center of the legal dispute was whether sports event contracts should be treated as federally regulated swaps under the Commodity Exchange Act or as gambling products subject to state law. Polymarket filed its initial suit in March against Michigan Attorney General Dana Nessel and Michigan Gaming Control Board Chair Jim Ananich along with other local officials. The legal move came just days after Nessel launched a separate enforcement case against Kalshi.
In its primary legal filing the company warned it was in imminent danger of state action. The corporate legal team detailed their position within the initial text of the lawsuit:
“The resulting harm would be irreparable. The chilling effect on lawful activity and the deprivation of Michigan residents’ access to a federally regulated exchange is precisely the harm Congress sought to prevent.”
The operator insisted its contracts were lawful event contracts overseen by the CFTC and accused the state of unlawful overreach.
Judge Maloney explained that derivatives and gambling may share similarities. However Congress designed the swap definition in the Dodd Frank Act to address systemic risks in financial markets rather than small scale consumer wagers. The court emphasized that without a clear statement from Congress federal law cannot override the traditional role of states in regulating gambling.
The judge outlined this financial distinction clearly within the text of the ruling:
“Rarely is the term ‘derivative’ popularly associated with something as mundane as the outcome of the Super Bowl or even sports gambling generally.”
The denial of the injunction leaves Polymarket exposed to possible enforcement in Michigan. The ruling signals that courts may be reluctant to extend federal derivatives law to sports prediction markets when state gambling laws are at stake. The Michigan ruling becomes the second loss for the brand in a United States court in the last few weeks.
Earlier this month the Nevada Gaming Control Board secured a court order from Judge Woodbury in the First Judicial District Court to shut down the prediction market operation within its borders. The regulator had also seen similar legal victories against Kalshi and Coinbase.
Meanwhile the operator continues its legal fight in Massachusetts. The firm sued Attorney General Andrea Joy Campbell and the Massachusetts Gaming Commission in February after an injunction against Kalshi was obtained. It also sued Governor Tim Walz and Attorney General Keith Ellison in June.
This action followed Minnesota becoming the first state to officially pass a law banning prediction markets. With over a dozen states now in the mix and the CFTC publishing new guidelines for operators the story is far from over and might make it to the Supreme Court.
