US Regulatory Body Takes Wisconsin to Court Over Prediction Market Authority

The US Commodity Futures Trading Commission has expanded its legal campaign to assert its authority over prediction markets by suing Wisconsin, which has joined a growing list of states being taken to court by the agency. This move comes as several states, including New York, have attempted to crack down on businesses such as Kalshi and Crypto.com for allegedly violating state gaming laws through their trading activities. However, CFTC Chairman Mike Selig has led a strong pushback, arguing that his agency has exclusive jurisdiction over event contracts, which he views as a form of derivatives activity that falls under the CFTC's purview. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to respond with a lawsuit of its own. Selig stated that the agency's actions are intended to send a clear message: interference with federal law in regulating financial markets will not be tolerated. The CFTC's lawsuits, including those filed against New York and Wisconsin, mark a significant turning point, according to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, as they signal the end of jurisdictional ambiguity and assert the commission's authority. 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.