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

The Commodity Futures Trading Commission has added Wisconsin to its list of states being sued for challenging its jurisdiction over prediction markets, which are operated by firms such as Kalshi and Crypto.com. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to regulate these platforms under state gaming laws, but CFTC Chairman Mike Selig has led a counter-effort, arguing that the agency has exclusive jurisdiction over event contracts, a form of derivatives activity. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for allegedly running unlicensed gambling operations, prompting the CFTC to file a lawsuit in response. Selig stated that the agency will take action against any state that interferes with federal law in regulating financial markets. The CFTC's actions, including its lawsuits against New York and Wisconsin, demonstrate a clear stance on jurisdictional issues, according to Coinbase's vice president of legal, Ryan VanGrack. Arizona's criminal case against Kalshi has been paused, with the court suggesting that federal law may preempt state gambling laws. The CFTC's efforts to assert its authority over prediction markets are ongoing, with the agency taking a firm stance against state-level challenges.