US Regulatory Body Takes Wisconsin to Court Over Prediction Market Oversight

The US Commodity Futures Trading Commission has expanded its legal campaign to defend its authority over prediction markets by suing Wisconsin, which recently accused several firms, including Kalshi and Crypto.com, of operating unlicensed gambling platforms. This move is part of a broader effort by the CFTC, led by Chairman Mike Selig, to assert its jurisdiction over event-contract trading, which it claims is a form of derivatives activity that falls under its purview. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to regulate these markets, citing violations of state gaming laws. In response to Wisconsin's lawsuit against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, the CFTC has filed its own lawsuit, with Chairman Selig stating that the agency will take action against any state that interferes with federal law regulating financial markets. This development follows a similar lawsuit filed by the CFTC against New York, which had sued Coinbase and Gemini over their prediction markets businesses. According to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, the CFTC's lawsuits mark a significant shift, signaling the end of jurisdictional ambiguity and asserting the commission's authority over these markets. The legal battle between the CFTC and various states is ongoing, with Arizona's criminal case against Kalshi currently on hold due to a court ruling that the federal agency is likely to succeed in its claim that US law preempts state gambling laws.