US Regulator Takes Wisconsin to Court Over Prediction Markets Oversight

The US Commodity Futures Trading Commission has added Wisconsin to its list of states being sued for challenging its jurisdiction over prediction markets, which involve trading at companies like Kalshi and Crypto.com. Several states have taken action against these businesses, alleging violations of state gaming laws due to betting activities on their platforms. However, CFTC Chairman Mike Selig has led a legal counterattack, arguing that the agency has exclusive authority over event contracts, an emerging form of derivatives activity. Recently, Wisconsin sued Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com for operating unlicensed gambling operations, echoing claims made in other states. In response, Selig filed a lawsuit in the US District Court for the Eastern District of Wisconsin, stating that he aims to send a clear message: "If you obstruct federal law regulating financial markets, we will take legal action against you." The CFTC's lawsuits, including those filed in New York and Wisconsin, mark a significant turning point. According to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, "The commission has drawn a clear line in the sand, signaling the end of jurisdictional ambiguity by moving to prevent state overreach." Meanwhile, Arizona's criminal case against Kalshi has been paused, with the court suggesting that federal law may preempt state gambling laws, potentially undermining the state's case.