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

The Commodity Futures Trading Commission has expanded its legal campaign to assert its authority over prediction markets, with Wisconsin becoming the latest state to be sued by the agency. This move is part of a broader effort by the CFTC to establish its jurisdiction over event-contract trading, which it claims falls under its regulatory purview as a form of derivatives activity. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to crack down on businesses such as Kalshi and Crypto.com, accusing them of violating state gaming laws through their betting operations. However, CFTC Chairman Mike Selig has led a pushback against these states, arguing that the agency has exclusive jurisdiction over the trading of event contracts. Recently, Wisconsin joined the list of states taking action against these businesses, suing Kalshi, Coinbase, Polymarket, Robinhood, 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 the agency will take legal action against any state that interferes with federal law regulating financial markets. This development comes on the heels of New York suing Coinbase and Gemini over their prediction markets businesses, prompting the CFTC to respond with its own lawsuit against the state. 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 sending a clear message that the agency will defend its regulatory authority. In a related case, Arizona's criminal prosecution of Kalshi was put on hold by a court earlier this month, with the judge suggesting that federal law is likely to preempt state gambling laws. For more information, read the update on the US CFTC's lawsuit against New York, which includes a statement from Coinbase.