US Regulatory Body Takes Wisconsin to Court Over Prediction Market Authority

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued for attempting to regulate event-contract markets, which the agency claims fall under its authority. Wisconsin recently joined other states, including New York, Arizona, Illinois, and Connecticut, in taking action against companies like Kalshi and Crypto.com for allegedly violating state gaming laws through their prediction market activities. However, CFTC Chairman Mike Selig has been leading a legal challenge against these states, arguing that the agency has exclusive jurisdiction over the trading of event contracts, which he considers a form of derivatives activity. In response to Wisconsin's lawsuit against several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations, Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that the agency will take action against any state that interferes with federal law regulating financial markets. This move follows a similar lawsuit filed against New York, and according to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's actions mark a clear stance against state encroachment on federal authority. Meanwhile, a court in Arizona has paused a criminal case against Kalshi, citing the likelihood that federal law will preempt state gambling laws.