US Regulatory Agency Takes Wisconsin to Court Over Prediction Markets Oversight

The US state of Wisconsin has become the latest to be sued by the Commodity Futures Trading Commission in an ongoing dispute over jurisdiction of prediction markets. This move follows similar actions against other states, including New York, as the CFTC seeks to establish its authority over the trading of event contracts. The dispute centers around the regulation of firms such as Kalshi and Crypto.com, which offer platforms for trading event contracts. Several states have taken legal action against these businesses, alleging violations of state gaming laws. However, CFTC Chairman Mike Selig has argued that the agency has exclusive jurisdiction over these markets, citing the trading of event contracts as a form of derivatives activity that falls under the CFTC's purview. Recently, Wisconsin took legal action against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, accusing them of 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 the CFTC will take action against any state that interferes with federal law regulating financial markets. This development is part of a larger trend, with the CFTC taking similar action against New York and other states. According to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, the CFTC's lawsuits mark a significant turning point, signaling the end of jurisdictional ambiguity and asserting the agency's authority over prediction markets.