TLDR A federal judge in Michigan denied preliminary injunctions for both Polymarket and Robinhood Judge Paul Maloney ruled sports-event contracts are likely not “swaps” under the Dodd-Frank Act The court found no clear congressional intent to override state gambling laws The rulings conflict with a February Tennessee decision that favored Kalshi A Sixth Circuit split is growing, with oral arguments scheduled for July 30
A federal judge in Michigan has denied requests by Polymarket and Robinhood to block state regulators from enforcing gambling laws against their sports prediction market products.
Judge Paul Maloney of the Western District of Michigan issued two nearly identical rulings on June 17. He concluded that neither company had shown a strong enough legal case to justify a preliminary injunction.
Both companies had argued their sports-event contracts qualify as “swaps” under the Commodity Exchange Act. If true, that would place them under federal oversight by the Commodity Futures Trading Commission, not state gambling regulators.
Maloney rejected that argument.
Sports Contracts Are Not Swaps
The judge said the word “swap” in the Dodd-Frank Act is legally ambiguous. He concluded that Congress did not intend to include sports-event contracts in that definition.
Dodd-Frank was passed after the 2008 financial crisis to regulate complex over-the-counter derivatives markets dominated by large financial institutions. Maloney said those markets had nothing to do with individuals placing small bets on football games.
“The primary issue it set out to solve had nothing to do with sports-related contracts,” Maloney wrote.
He also warned that accepting the companies’ broad reading of “swap” would expand federal authority far beyond financial markets. He said it could even pull in mortgages, service contracts, and prenuptial agreements.
Polymarket had filed suit in March against Michigan Attorney General Dana Nessel and other state officials. The company argued