CFTC Takes Legal Action Against Wisconsin in Ongoing Battle for Authority Over Prediction Markets

The US state of Wisconsin has become the latest to be sued by the Commodity Futures Trading Commission, as the agency continues to assert its authority over prediction markets operated by firms such as Kalshi and Crypto.com. This move is a response to several states, including Wisconsin, attempting to enforce their gaming laws against these companies, claiming they are engaging in unauthorized betting activities. However, CFTC Chairman Mike Selig has been leading a counter-effort, arguing that his agency has exclusive jurisdiction over event contracts, which he believes are a form of derivatives that fall under the CFTC's purview. Recently, Wisconsin filed a lawsuit against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, alleging that they are operating unlicensed gambling operations within the state, mirroring similar claims made by other states. In response, Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that his goal is to send a clear message: "Any interference with federal law regulating financial markets will be met with legal action." This development follows New York's lawsuit against Coinbase and Gemini over their prediction markets businesses, which was swiftly countered by the CFTC with its own lawsuit against the state. Meanwhile, Arizona's criminal case against Kalshi has been put on hold, with the court suggesting that federal law is likely to preempt state gambling laws, bolstering the CFTC's claims.