US Regulator Takes Wisconsin to Court Over Prediction Markets Dispute

The Commodity Futures Trading Commission is taking legal action against Wisconsin, joining a growing list of states the agency is suing for attempting to assert jurisdiction over prediction markets. The move is part of a broader effort by the regulator to defend its authority over these markets, which are offered by companies such as Kalshi and Crypto.com. Several states have launched lawsuits against these firms, alleging violations of local gaming laws, but the CFTC argues that it has exclusive jurisdiction over the trading of event contracts, which it considers a form of derivatives activity. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations in the state. In response, CFTC Chairman Mike Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that the agency will take action against any state that interferes with federal law regulating financial markets. The CFTC has also sued New York over a similar dispute, with Coinbase's vice president of legal, Ryan VanGrack, stating that the agency's actions mark a clear boundary, ending jurisdictional ambiguity. Arizona has also been pursuing a case against Kalshi, but a court has paused the prosecution, citing the likelihood of federal law preempting state gambling laws.