US Regulatory Agency Takes Wisconsin to Court Over Prediction Markets

The US Commodity Futures Trading Commission has expanded its legal campaign 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 the trading of event contracts, which it believes fall under its regulatory purview as a form of derivatives activity. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to enforce their own gaming laws against firms like Kalshi and Crypto.com, only to face pushback from the CFTC, led by Chairman Mike Selig. The agency argues that it has exclusive jurisdiction over these markets, citing federal law. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for allegedly operating unlicensed gambling operations within the state. In response, the CFTC has filed a lawsuit in the US District Court for the Eastern District of Wisconsin, with Chairman Selig stating that the agency will take legal action against any state that interferes with federal regulation of financial markets. This development follows a similar lawsuit filed against New York and is seen as a significant assertion of the CFTC's authority in the face of state-level pushback. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's actions mark a clear boundary, signaling the end of jurisdictional ambiguity in the regulation of prediction markets.