US Regulatory Body Takes Wisconsin to Court Over Prediction Market Dispute

The state of Wisconsin has become the latest to be sued by the US Commodity Futures Trading Commission in an ongoing effort to establish the agency's jurisdiction over prediction markets operated by firms like Kalshi and Crypto.com. Several states, including New York, have targeted these businesses, alleging violations of local gaming laws due to betting activities on their platforms. However, CFTC Chairman Mike Selig has spearheaded a legal counterattack, arguing that his agency has exclusive jurisdiction over event contracts, which he views as a new 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 running unlicensed gambling operations within the state. This move mirrors similar claims made by other states against the industry. In response, Chairman Selig has filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating his intention to send a clear message: 'If you interfere with federal law regulating financial markets, we will take legal action against you.' Last week, New York also sued 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, including those filed in New York and Wisconsin, draw a clear line in the sand. By taking steps to block state overreach, the commission has sent an unmistakable signal: The era of jurisdictional ambiguity is over.' Arizona has been pursuing a criminal case against Kalshi, but a court recently paused the prosecution, suggesting that federal law is likely to preempt state gambling laws, and the CFTC may succeed in its argument.