Judge Tells Polymarket: You're a Bet, Not a Swap 📜

A federal judge in Michigan ruled Wednesday that sports-related wagers on Polymarket do not qualify as swaps under the Commodity Futures Trading Commission's jurisdiction, denying the platform's request for a preliminary injunction against state regulators. U.S. District Court Judge Paul L. Maloney of the Western District of Michigan said Polymarket is unlikely to succeed on the merits and that its prediction market contracts fall outside federal derivatives oversight. Michigan authorities have sought to bar Polymarket from offering sports-related wagers in the state, arguing the products constitute illegal sports betting, while Polymarket has maintained the contracts are swaps governed by federal law.

In his ruling, Maloney rejected the broad interpretation of derivatives regulation advanced by the CFTC under President Donald Trump's second administration, which has asserted authority over prediction markets through existing statutes including the Dodd-Frank Act of 2010. "Plaintiff's vision of the scope of derivatives is so vast that it would encompass vast swaths of activity never understood to be associated with the financial industry and instead traditionally associated with core state, as opposed to federal, responsibilities," Maloney wrote. He added: "Congress is not so cavalier with the fundamental federalist structure of the government" and said post-2008 financial crisis legislation was "not aimed at fundamentally redefining the balance between the federal and state governments in ways unrelated to the problems it set out to solve." The CFTC has sued several states in recent months over attempts to restrict prediction markets, a position the White House has supported.

Federal courts across the country have issued divergent rulings on the jurisdictional question as prediction market platforms and state regulators continue to clash in red and blue states alike. In the Sixth Circuit, which includes federal courts in Michigan, Ohio, Kentucky and Tennessee, an Ohio federal judge sided with state regulators in March, while a Tennessee federal judge sided with prediction markets in February. The Sixth Circuit Court of Appeals is set to begin weighing the issue.

Separately, a bettor placed $1 million on Spain to win a football match against Cape Verde on June 15, 2026, according to a Polymarket Sports post on X. Spain, the reigning European champions on a 30-match unbeaten run, were priced as heavy favorites, with the draw listed at 6.6 cents. The wager would have paid out $1,085,943.48 if successful, but Spain did not win the match, according to the same post.