US Regulator Takes Wisconsin to Court Over Prediction Markets Dispute

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued over the regulation of prediction markets, intensifying its defense of jurisdictional authority. This move is part of a broader effort by the agency, led by Chairman Mike Selig, to establish its dominance over the trading of event contracts, which it considers a form of derivatives activity. Several states, including New York, Arizona, Illinois, and Connecticut, have attempted to regulate or shut down platforms like Kalshi and Crypto.com, citing violations of state gaming laws. However, the CFTC argues that it has exclusive jurisdiction over these markets, prompting a series of lawsuits against these states. Wisconsin's recent lawsuit against several firms, including Kalshi and Crypto.com, for operating unlicensed gambling operations in the state, has been met with a swift response from the CFTC, which filed a lawsuit in the US District Court for the Eastern District of Wisconsin. Chairman Selig emphasized that the agency will take legal action against any state that interferes with federal law regulating financial markets. This development follows a similar lawsuit filed against New York, with the CFTC aiming to draw a clear line in the sand regarding its authority over prediction markets. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's actions signify the end of jurisdictional ambiguity, sending a strong signal that the era of confusion is over. The agency's move has also been influenced by a recent court decision in Arizona, where a judge paused a criminal case against Kalshi, suggesting that federal law is likely to preempt state gambling laws.