CFTC Takes Wisconsin to Court in Ongoing Dispute Over Regulatory Authority

The Commodity Futures Trading Commission has added Wisconsin to its list of defendants in a series of lawsuits aimed at establishing the agency's authority over prediction markets. This move comes as several states, including New York, have attempted to crack down on companies such as Kalshi and Crypto.com for allegedly violating state gaming laws. CFTC Chairman Mike Selig has been leading the charge against these states, arguing that his agency has exclusive jurisdiction over event-contract trading, which he considers a form of derivatives activity. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to file a lawsuit in response. Selig stated that the agency will take action against any state that interferes with federal law in regulating financial markets. The CFTC's actions have been seen as a clear signal that the agency will not tolerate state-level interference in its regulatory authority, with one expert noting that the era of jurisdictional ambiguity is over. The dispute has also played out in other states, including Arizona, where a court has paused a criminal case against Kalshi, citing the likelihood that federal law will preempt state gambling laws.