US Regulatory Body Takes Wisconsin to Court Over Prediction Market Dispute

The US Commodity Futures Trading Commission has expanded its legal campaign to assert its authority over prediction markets by suing Wisconsin, which recently joined the ranks of states taking action against firms like Kalshi and Crypto.com for allegedly violating state gaming laws through their trading activities. Several states, including New York, Arizona, Illinois, and Connecticut, have targeted these businesses, but CFTC Chairman Mike Selig has been leading a legal pushback, arguing that his agency has exclusive jurisdiction over event contracts, which he considers a form of derivatives activity that falls under the CFTC's purview. Wisconsin recently sued Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, accusing them of operating unlicensed gambling operations within the state, mirroring claims made by other states against the industry. In response, Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that his intention is to send a clear message: "If you interfere with federal law regulating financial markets, we will take legal action against you." This development comes on the heels of New York suing Coinbase and Gemini over their prediction markets businesses, prompting the CFTC to respond with its own lawsuit against the state. According to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, "The CFTC's lawsuits, including the recent actions in New York and Wisconsin, mark a clear boundary. By taking steps to block state interference, the commission has sent a strong signal that the era of jurisdictional uncertainty is over." Arizona has also been pursuing a criminal case against Kalshi, but a court recently paused the prosecution, with the judge suggesting that federal law is likely to preempt state gambling laws, potentially leading to the CFTC's success in its case.