US Regulatory Body Takes Wisconsin to Court Over Prediction Market Dispute

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 effort by the CFTC to assert its dominance in overseeing the trading of event contracts, a form of derivatives that the agency has traditionally regulated. Several states, including New York, Arizona, and Illinois, have attempted to crack down on businesses such as Kalshi and Crypto.com for allegedly violating state gaming laws, but the CFTC has pushed back, arguing that it has exclusive jurisdiction over these markets. The agency's chairman, Mike Selig, has led the charge, filing lawsuits against states that interfere with the operation of federal law in regulating financial markets. Wisconsin's recent lawsuit against several companies, including Kalshi and Crypto.com, for operating unlicensed gambling operations in the state, prompted the CFTC to respond with its own lawsuit. The agency's actions have been seen as a clear signal that it will not tolerate state encroachment on its regulatory authority, with one industry executive noting that the era of jurisdictional ambiguity is over. The CFTC's lawsuits have also had an impact on ongoing cases, with a court in Arizona pausing a criminal prosecution against Kalshi, citing the likelihood that federal law will preempt state gambling laws.