US Regulatory Body Takes Wisconsin to Court Over Dispute on Prediction Market Oversight

The US Commodity Futures Trading Commission has added Wisconsin to its list of defendants in a series of lawsuits aimed at asserting the agency's authority over prediction markets, which are offered by companies such as Kalshi and Crypto.com. The move comes as several states, including New York, Arizona, Illinois, and Connecticut, have attempted to crack down on these businesses for allegedly violating state gaming laws. However, CFTC Chairman Rostin Behnam has led a counter-effort, arguing that the agency has sole jurisdiction over event contracts, which he considers a form of derivatives trading that falls under the CFTC's purview. Recently, Wisconsin filed a lawsuit against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, accusing them of operating unlicensed gambling operations within the state. In response, Chairman Behnam filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that the agency will take action against any state that interferes with federal law and the regulation of financial markets. This development is part of a larger trend, as the CFTC has also sued New York over its attempts to regulate prediction markets, and Arizona has paused a criminal case against Kalshi due to the likelihood of federal law preempting state gambling laws.