Polymarket’s temporary restraining order request denied by Michigan federal judge

Polymarket has been denied a temporary restraining order by Michigan federal court Judge Paul Maloney, as the state officially joins Nevada and Ohio in determining sporting event contracts are not “swaps” regulated by the Commodity Futures Trading Commission (CFTC). 

"The term 'event' does have common usages that allow it to mean essentially anything that happens. But to read the statute this way would flatten the differences between 'event' and any other term by expanding its reach beyond any logical limit.

"There would be no difference between event and occurrence, and the statute’s other inclusive definitions of swap would serve little to no purpose as they would be subsumed by the all-encompassing event clause.

"Based on Plaintiff’s arguments, the Court sees no logical way to interpret the term event consistent with Plaintiff’s position without extending its reach to any and all things that happen. Individual actions and scores in individual sporting events have no intrinsic importance outside the context of the game.”

Judge Maloney stated the court was “most persuaded” by actions taken against Polymarket in Nevada, which described events as a “happening of some significance that took place or will take place, in a certain location, during a particular interval of time, such as a particular sporting event or an organized activity or celebration for the public or a particular group.”

Judge Maloney continued: "The text, then, when read in the light of the rest of the provision and its place in the statutory scheme, seems to undercut the necessary basis of Plaintiff’s preemption arguments. 

“If the event contracts allegedly threatened by the state’s enforcement actions are not ‘swaps,’ federal law does not stand in the state’s way."

Fellow prediction market operator Kalshi was denied a preliminary injunction request against Ohio regulators, following similar rulings in Nevada, Massachusetts and Maryland which also denied preemptive action from Kalshi. 

Within its decision, the Ohio court stated its conclusion was “further supported by the Court’s obligation to avoid absurdity,” following regulators’ belief that defining a “swap” to include sporting event contracts would generate “absurd results.”