US Regulator Takes Wisconsin to Court Over Prediction Market Dispute

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. This move comes as part of a broader effort by the CFTC, led by Chairman Mike Selig, to defend its authority over the trading of event contracts on platforms such as Kalshi and Crypto.com. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to regulate these businesses under state gaming laws, prompting a legal pushback from the CFTC. The agency argues that it has exclusive jurisdiction over these emerging forms of derivatives activity. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for allegedly operating unlicensed gambling operations within the state. In response, Chairman Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that the CFTC will take legal action against any state that interferes with federal law regulating financial markets. This development follows a similar lawsuit filed against New York, which had also targeted Coinbase and Gemini over their prediction markets businesses. Arizona's criminal case against Kalshi was recently put on hold, with the court suggesting that federal law may preempt state gambling laws, potentially bolstering the CFTC's position.