US Regulator Takes Wisconsin to Court Over Prediction Markets Oversight

The US Commodity Futures Trading Commission has expanded its legal campaign to assert jurisdiction over prediction markets, adding Wisconsin to the list of states it is suing. This move comes as several states, including New York, have attempted to crack down on businesses like Kalshi and Crypto.com for allegedly violating state gaming laws through their trading platforms. CFTC Chairman Mike Selig has been leading the charge against these states, arguing that his agency has exclusive authority over event contracts, which he believes are a form of derivatives. Wisconsin recently sued multiple companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations within the state. In response, Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that he aims to send a clear message: 'If you interfere with federal law regulating financial markets, we will take legal action.' The CFTC's actions have been seen as a significant move to establish its authority, with Coinbase's vice president of legal, Ryan VanGrack, stating that the agency has drawn a 'definitive line in the sand' by pursuing lawsuits against states. The issue has also played out in Arizona, where a court has paused a criminal case against Kalshi, citing the likelihood that federal law will preempt state gambling laws.