US Regulatory Body Takes Wisconsin to Court Over Prediction Markets Oversight

The US Commodity Futures Trading Commission has added Wisconsin to its list of defendants in a series of lawsuits aimed at asserting the agency's jurisdiction 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 through their trading activities. CFTC Chairman Mike Selig has been leading the charge against these states, arguing that his agency has exclusive authority over event contracts, which he views as a form of derivatives trading that falls under the CFTC's purview. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations within the state. In response, Chairman Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that his goal is to send a clear message: any interference with federal law in regulating financial markets will be met with legal action. This development is part of a larger trend, with the CFTC also suing New York over its attempts to regulate prediction markets. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's actions mark a significant turning point, as the agency is now drawing a clear line in the sand to protect its jurisdiction. Arizona has also been pursuing a criminal case against Kalshi, but a recent court ruling has paused the prosecution, suggesting that federal law may preempt state gambling laws.