US Regulatory Body Takes Wisconsin to Court Over Prediction Market Oversight

The US Commodity Futures Trading Commission has escalated its campaign to assert jurisdiction over prediction markets by suing Wisconsin, marking the latest development in a series of legal actions against states. The move comes as several states, including New York, have attempted to regulate these markets under their gaming laws, targeting firms like Kalshi and Crypto.com. CFTC Chairman Mike Selig has spearheaded the agency's pushback, arguing that the CFTC has exclusive authority over event-contract trading, which he views as a form of derivatives activity. Wisconsin recently filed a lawsuit against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, accusing them of operating unlicensed gambling operations. In response, Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, emphasizing that the agency will take action against states that interfere with federal law in regulating financial markets. The CFTC's actions, including its recent lawsuits against New York and Wisconsin, demonstrate a clear stance on jurisdictional authority. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC has drawn a definitive line in the sand, signaling the end of jurisdictional ambiguity. The agency's efforts have also led to a pause in Arizona's criminal case against Kalshi, with the court suggesting that federal law is likely to preempt state gambling laws.