US Commodity Futures Trading Commission Takes Wisconsin to Court Over Prediction Markets

The Commodity Futures Trading Commission has filed a lawsuit against Wisconsin, marking the latest development in its efforts to assert jurisdiction over prediction markets. This move comes after several states, including New York, Arizona, Illinois, and Connecticut, attempted to regulate or shut down businesses such as Kalshi and Crypto.com for allegedly violating state gaming laws. CFTC Chairman Mike Selig has led the charge, arguing that his agency has exclusive authority over event contracts, which he believes are a form of derivatives. Wisconsin recently sued several companies, including Kalshi, Coinbase, and Crypto.com, for operating unlicensed gambling operations, prompting the CFTC to respond with a lawsuit. The CFTC's actions have been seen as a clear signal that it will not tolerate state interference in the regulation of financial markets. According to Ryan VanGrack, Coinbase's vice president of legal, the CFTC's lawsuits have drawn a line in the sand, ending jurisdictional ambiguity. The agency's efforts have also led to a pause in Arizona's criminal case against Kalshi, with the judge suggesting that federal law may preempt state laws.