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 attempting to exert jurisdiction over prediction markets, which the agency claims falls under its regulatory purview. This move is part of a broader campaign by the CFTC, led by Chairman Mike Selig, to defend its authority over event-contract trading, particularly against states that have accused firms like Kalshi and Crypto.com of violating local gaming laws. Selig argues that the CFTC has exclusive jurisdiction over these contracts, viewing them as a form of derivatives activity that the agency has traditionally regulated. Wisconsin recently sued several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to file a lawsuit in the US District Court for the Eastern District of Wisconsin. The agency aims to send a clear message that it will not tolerate interference with federal law in regulating financial markets. This lawsuit follows similar actions against other states, including New York, where the CFTC also filed a lawsuit after the state took legal action against crypto firms over their prediction markets businesses. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's lawsuits mark a significant stance against jurisdictional ambiguity, signaling that the era of unclear oversight is coming to an end. The legal landscape is further complicated by cases like Arizona's, where a criminal prosecution against Kalshi was paused due to the likelihood of federal law preempting state gambling laws.