US Regulator Sues Wisconsin in Ongoing Battle for Control of Prediction Markets

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued for attempting to exert control over prediction markets, escalating a legal dispute over the agency's authority. Several states have taken action against companies like Kalshi and Crypto.com, alleging violations of state gaming laws due to betting activities on their platforms. However, CFTC Chairman Mike Selig has spearheaded a legal challenge against these states, including New York, Arizona, Illinois, and Connecticut, arguing that the agency has exclusive jurisdiction over event contracts, which he views as a new form of derivatives activity. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for operating unlicensed gambling operations within the state, prompting the CFTC to respond with a lawsuit. Chairman Selig stated that the agency will take legal action against any state that interferes with federal law regulating financial markets. The CFTC's actions have been seen as a clear signal that the agency will defend its authority over prediction markets, with Coinbase's vice president of legal, Ryan VanGrack, commenting that the era of jurisdictional ambiguity is over. The dispute has also led to a pause in Arizona's criminal case against Kalshi, with the court suggesting that federal law may preempt state gambling laws.