US Regulatory Agency Takes Wisconsin to Court Over Prediction Market Dispute

The US state of Wisconsin has become the latest target of a lawsuit filed by the Commodity Futures Trading Commission, which is seeking to establish its jurisdiction over prediction markets operated by companies such as Kalshi and Crypto.com. This move is part of a broader effort by the CFTC to push back against states that have been attempting to regulate these markets under their own gaming laws, with Chairman Mike Selig leading the charge. He argues that the CFTC has exclusive authority over the trading of event contracts, which are a type of derivative instrument. Recently, Wisconsin took legal action against several firms, including Kalshi, Coinbase, and Crypto.com, alleging that they were operating unlicensed gambling operations within the state. 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: "We will take legal action against any state that interferes with the operation of federal law in regulating financial markets." This development follows similar lawsuits filed by the CFTC against other states, including New York, where the agency is challenging the state's attempts to regulate prediction markets. In a related case, a court in Arizona recently put a criminal prosecution against Kalshi on hold, citing the likelihood that federal law would preempt state gambling laws.