CFTC Sues Wisconsin to Protect Federal Jurisdiction Over Prediction Markets

The US Commodity Futures Trading Commission (CFTC) has filed a lawsuit against the state of Wisconsin, marking the agency's fifth legal challenge against a US state attempting to assert jurisdiction over prediction markets. The action is a direct response to Wisconsin's recent lawsuits against five CFTC-regulated platforms: Coinbase, Robinhood, Crypto.com, Kalshi, and Polymarket. Wisconsin authorities contend that prediction markets offering contracts on sports-related events constitute illegal betting and should therefore require state-level gaming licenses. This position has been consistently rebuffed by both the platforms and the CFTC, who maintain that such contracts fall exclusively under federal regulatory authority. CFTC Chairman Michael Selig emphasized that states cannot circumvent the directives of Congress. The agency argues that the event contracts in question are regulated as designated contract markets under federal law, and that Wisconsin's attempt to criminalize these activities intrudes upon a national swaps market scheme designed by Congress. Filed in a Wisconsin federal court alongside the Justice Department’s Civil Division, the complaint names Governor Anthony Evers, Attorney General Josh Kaul, and the Wisconsin Gaming Division. The CFTC is seeking a permanent injunction to prohibit the state from taking further action against these prediction markets. This legal battle is part of a broader trend, with the CFTC recently filing similar lawsuits against New York, Arizona, Connecticut, and Illinois. The outcome of these cases will likely determine the extent to which state gambling laws can be applied to federally regulated financial instruments.