US Regulatory Body Takes Wisconsin to Court Over Prediction Market Oversight

The US Commodity Futures Trading Commission has added Wisconsin to its list of defendants in a series of lawsuits aimed at asserting the agency's jurisdiction over prediction markets. This move comes as several states, including Wisconsin, have targeted companies such as Kalshi and Crypto.com, accusing them of violating state gaming laws through their betting operations. However, CFTC Chairman Mike Selig has been leading a legal counterattack, arguing that his agency has exclusive authority over the trading of event contracts, which he believes are a form of derivatives activity that falls under the CFTC's purview. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for operating unlicensed gambling operations within the state. In response, Chairman Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that the CFTC will take action against any state that interferes with federal law in regulating financial markets. This development follows a similar lawsuit filed against New York, which had also sued Coinbase and Gemini over their prediction markets businesses. 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 in the regulation of financial markets. Meanwhile, Arizona's criminal case against Kalshi has been put on hold, with the court suggesting that federal law is likely to preempt state gambling laws.