US Commodity Futures Trading Commission Takes Wisconsin to Court Over Prediction Markets

The US state of Wisconsin has become the latest to be sued by the Commodity Futures Trading Commission, which is fighting to assert its authority over the burgeoning prediction markets sector. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to crack down on companies such as Kalshi and Crypto.com, accusing them of violating local gaming laws. However, CFTC Chairman Mike Selig has pushed back against these efforts, arguing that his agency has exclusive jurisdiction over the trading of event contracts, which he believes are a form of derivatives. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to respond with a lawsuit of its own. The move is seen as a bid to establish a clear precedent and send a message to states that the CFTC will not tolerate interference with federal law. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's actions mark a significant turning point, signaling the end of jurisdictional ambiguity and asserting the agency's authority over the sector. The development comes as Arizona's criminal case against Kalshi has been put on hold, with a court ruling that federal law is likely to preempt state gambling laws.