US Regulatory Body Takes Wisconsin to Court Over Predictive Markets

The US Commodity Futures Trading Commission has added Wisconsin to its growing list of states being sued, as part of its efforts to establish jurisdiction over prediction markets operated by firms such as Kalshi and Crypto.com. Several states, including New York, have taken legal action against these businesses, alleging violations of state gaming laws due to betting activities on their platforms. However, CFTC Chairman Mike Selig has led a counter-legal push, arguing that the agency has exclusive authority over event contracts, which are a new form of derivatives activity that falls under the CFTC's purview. Recently, Wisconsin sued several companies, including Kalshi, Coinbase, and Crypto.com, for operating unlicensed gambling operations within the state. In response, Chairman Selig has filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that he aims to send a clear message: federal law regulating financial markets will not be hindered by state interference. This move follows a similar lawsuit filed against New York last week, after the state took action against Coinbase and Gemini over their prediction markets businesses. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's lawsuits mark a significant turning point, signaling the end of jurisdictional ambiguity and affirming the commission's authority. 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. The regulatory body's actions underscore its commitment to defending its authority over predictive markets.