CFTC Takes Wisconsin to Court in Ongoing Battle for Control Over Prediction Markets

The Commodity Futures Trading Commission has added Wisconsin to its list of defendants in a series of lawsuits aimed at establishing the agency's jurisdiction over prediction markets. This move comes as several states, including New York, have attempted to crack down on businesses such as Kalshi and Crypto.com for allegedly violating state gaming laws. CFTC Chairman Mike Selig has been leading the charge, arguing that the agency has exclusive jurisdiction over event contracts, which he claims are a form of derivatives activity that falls under the CFTC's purview. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to file a lawsuit in response. The CFTC's actions have been seen as a clear message to states to refrain from interfering with federal law in regulating financial markets. The agency's lawsuits have been interpreted as a decisive stance against jurisdictional ambiguity, with Coinbase's vice president of legal, Ryan VanGrack, stating that the era of uncertainty is over. Arizona's pursuit of a criminal case against Kalshi has been put on hold, with the court suggesting that federal law is likely to preempt state gambling laws.