US Regulator Takes Wisconsin to Court Over Prediction Market Authority

The US Commodity Futures Trading Commission has expanded its legal battle to assert its authority over prediction markets, with Wisconsin becoming the latest state to be sued. This move is part of a broader effort by the agency to establish its jurisdiction over event-contract trading, which it believes falls under its regulatory purview. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to crack down on businesses such as Kalshi and Crypto.com, accusing them of violating state gaming laws. However, CFTC Chairman Mike Selig has led a counterattack, arguing that the agency has exclusive jurisdiction over these markets, which are considered a form of derivatives activity. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to file a lawsuit in response. Chairman Selig stated that the agency will take legal action against any state that interferes with federal law regulating financial markets. The CFTC's actions have been seen as a clear signal that it will not tolerate state-level interference in its regulatory authority. According to Ryan VanGrack, Coinbase's vice president of legal, the agency's lawsuits mark the end of jurisdictional ambiguity, sending a strong message that federal law preempts state gambling laws.