A Michigan federal judge ruled that sports prediction markets on Polymarket are not swaps under CFTC jurisdiction, denying the platform's bid to block state regulators from restricting such contracts. Judge Paul L. Maloney rejected Polymarket's request for a preliminary injunction against Michigan, stating the company is unlikely to succeed on its claim that sports wagers are derivatives regulated by the CFTC. The ruling challenges the CFTC's aggressive stance under the Trump administration, which has sued states to assert federal authority over prediction markets. Maloney emphasized that Congress did not intend the Dodd-Frank Act to redefine federal-state boundaries. The case now heads to the Sixth Circuit Court of Appeals, with conflicting lower court rulings in Ohio and Tennessee, and possible eventual Supreme Court review.

Key facts

• Michigan judge ruled Polymarket sports contracts are not CFTC-regulated swaps.
• Polymarket denied preliminary injunction against Michigan's ban on sports betting.
• Judge Maloney rejected CFTC's broad interpretation of derivatives authority.
• Case heads to Sixth Circuit with conflicting lower court rulings.
• Dispute may ultimately reach the U.S. Supreme Court.