US Regulatory Agency Takes Wisconsin to Court Over Prediction Market Oversight

The US Commodity Futures Trading Commission has launched a lawsuit against Wisconsin, marking the latest development in the agency's efforts to defend its jurisdiction over prediction markets. This move comes as several states, including Wisconsin, have targeted firms like Kalshi and Crypto.com for allegedly violating state gaming laws through their trading activities. CFTC Chairman Mike Selig has been at the forefront of the agency's pushback against these states, arguing that the commission has exclusive authority over event contracts, which he views as a form of derivatives trading 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 has filed a lawsuit in the US District Court for the Eastern District of Wisconsin, emphasizing that the agency will take action against any state that interferes with federal law regulating financial markets. This lawsuit is the latest in a series of actions the CFTC has taken against states, including New York, which recently sued Coinbase and Gemini over their prediction markets businesses. The CFTC responded by filing 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 asserting the commission's authority over financial markets. In a related development, Arizona's criminal case against Kalshi has been put on hold, with the court suggesting that federal law is likely to preempt state gambling laws, paving the way for the CFTC to succeed in its argument.