US Regulatory Agency Takes Wisconsin to Court Over Prediction Market Dispute

The US Commodity Futures Trading Commission has added Wisconsin to its list of states facing lawsuits over the agency's jurisdiction in prediction markets, with firms like Kalshi and Crypto.com at the center of the dispute. Several states, including New York, Arizona, Illinois, and Connecticut, have targeted 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 jurisdiction over event contracts, which he views as a form of derivatives trading that falls under the CFTC's purview. Wisconsin recently sued Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com for operating unlicensed gambling operations, prompting Selig to respond with a lawsuit in the US District Court for the Eastern District of Wisconsin. Selig stated that his goal is to send a message: "If you interfere with federal law in regulating financial markets, we will take legal action." The CFTC's actions, including its lawsuits against New York and Wisconsin, demonstrate a clear stance on the matter, according to Ryan VanGrack, Coinbase's vice president of legal and head of global litigation, who said, "The commission has sent an unmistakable signal: The era of jurisdictional ambiguity is over." Arizona's criminal case against Kalshi was paused by a court earlier this month, with the judge suggesting that federal law is likely to preempt state gambling laws. The regulatory agency's actions are part of a broader effort to assert its authority over prediction markets and event-contract trading.