US Regulatory Agency Takes Wisconsin to Court Over Predictive Markets

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued for attempting to exert control over prediction market trading, a space where firms like Kalshi and Crypto.com operate. Several states have taken legal action against these businesses, alleging violations of local gaming laws due to betting activities on their platforms. However, the CFTC, under Chairman Mike Selig's leadership, has been pushing back against these states, including New York, Arizona, Illinois, and Connecticut, arguing that it possesses exclusive jurisdiction over event contracts, which it views as a form of derivatives activity. Wisconsin recently sued Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com for operating unlicensed gambling operations within the state, echoing claims made by other states against the industry. In response, Chairman 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: interference with federal law regulating financial markets will result in legal action. This move follows a similar lawsuit filed against New York last week. According to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, the CFTC's lawsuits, including those in New York and Wisconsin, draw a clear line, signaling an end to jurisdictional ambiguity. Arizona's criminal case against Kalshi was recently paused by a court, which suggested that federal law is likely to preempt state gambling laws, potentially bolstering the CFTC's position.