US Regulator Takes Wisconsin to Court Over Prediction Market Dispute

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued over jurisdiction of event-contract markets, with the regulator asserting its authority over firms such as Kalshi and Crypto.com. Several states have taken action against these businesses, alleging breaches of state gaming laws due to betting activities on their platforms. However, CFTC Chairman Mike Selig has led a counter-campaign, arguing that the derivatives regulator has sole jurisdiction over event-contract trading, which he claims is a new form of derivatives activity. Recently, Wisconsin filed a lawsuit against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, accusing them of operating unlicensed gambling operations within the state, mirroring claims made in other jurisdictions. In response, Selig 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 market 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. By taking action to prevent state overreach, the commission has sent a clear signal that the era of jurisdictional ambiguity is over." Arizona has been pursuing a criminal case against Kalshi, but a court recently paused the prosecution, with the judge suggesting that federal law is likely to preempt state gambling laws, potentially leading to the CFTC's success in its case.