US Regulator Takes Wisconsin to Court in Ongoing Battle for Control of Prediction Markets

The US Commodity Futures Trading Commission has added Wisconsin to its list of defendants in a series of lawsuits aimed at establishing the agency's jurisdiction over prediction markets. This move comes as several states, including New York, have attempted to crack down on firms like Kalshi and Crypto.com for allegedly violating state gaming laws. CFTC Chairman Mike Selig has been leading the charge, arguing that his agency has exclusive authority over event-contract trading, which he claims falls under the umbrella 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 lawsuits have been seen as a clear signal that the agency will no longer tolerate jurisdictional ambiguity. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's actions demonstrate a commitment to upholding federal law and preventing state encroachment. The agency's efforts have already shown signs of success, with a court in Arizona pausing a criminal case against Kalshi due to the likelihood of federal law preemption.