US Regulator Takes Wisconsin to Court in Ongoing Dispute Over Prediction Market Oversight

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued for attempting to exert control over prediction markets, which the agency claims falls under its jurisdiction. Several states, including New York, have taken action against firms such as Kalshi and Crypto.com, accusing them of violating state gaming laws. However, CFTC Chairman Mike Selig has led a counter-effort, arguing that the agency has exclusive authority over the trading of event contracts, which he believes are a form of derivatives activity that has long been regulated by the CFTC. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to respond with a lawsuit. Selig stated that the agency will take action against any state that interferes with federal law in regulating financial markets. This development is part of a broader dispute between the CFTC and several states, including Arizona and Illinois, over the regulation of prediction markets. A court in Arizona has paused a criminal case against Kalshi, citing the likelihood that federal law will preempt state gambling laws.