The U.S. Commodity Futures Trading Commission has sued the state of Wisconsin, escalating its legal campaign to block state action against federally regulated prediction market platforms.
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- The CFTC has sued the state of Wisconsin, arguing that federal law gives it exclusive authority over market prediction contracts.
- Wisconsin officials claimed the platforms offered betting products that fell under the state’s gambling laws.
- Michael Selig, head of the Commodity Futures Trading Commission (CFTC), warned states, including Wisconsin, that federal regulators would take legal action if enforcement continues.
According to A statement From the Commodity Futures Trading Commission The lawsuit directly responds to recent Wisconsin complaints against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, all of which operate prediction markets under federal supervision.
“States cannot circumvent the clear guidance issued by Congress,” CFTC Chairman Michael Selig said, adding that similar warnings have been issued to New York, Arizona and other states seeking similar implementation.
“Our message to Wisconsin is the same as our message to New York, Arizona and others: If you interfere with the operation of federal law in regulating financial markets, we will sue you.”
The lawsuit, filed alongside the U.S. Department of Justice’s civil division in a federal court in Wisconsin, says event-based contracts listed on registered exchanges fall within the agency’s “exclusive jurisdiction” as designated contract markets. Wisconsin’s attempt to enforce gambling laws “intrudes on the exclusive federal scheme designed by Congress to supervise national barter markets,” the filing states.
The regulator asked the court to declare that state gambling laws do not apply to platforms regulated by the CFTC and to issue a permanent injunction barring the state of Wisconsin from pursuing enforcement actions.
State lawsuits conflict with claims for federal oversight
legal action in wisconsin, Submitted a few days agotargets the same set of platforms across decades associated with real-world outcomes, including sporting events. In complaints reviewed from Dane County filings, state prosecutors say users place money on event outcomes and receive fixed payouts, a structure that Attorney General Josh Cole described as falling within the state’s definition of betting.
“Thinly concealing illegal conduct does not make it legal,” Cole said in the previous case.
The state filings also pointed to marketing language from the platforms, including descriptions that framed their services as state-level betting systems, while noting the transaction fees collected on trades as comparable to casino revenue models.
Federal regulators and industry participants have rejected this framework. The CFTC’s complaint reaffirms that these contracts qualify as swaps under the Federal Commodities Act, a position that has also been upheld in previous lawsuits, including a ruling from the U.S. Court of Appeals for the Third Circuit that deal The regulator’s decision not to prohibit certain contracts is an effective solution to judicial issues.
The Wisconsin case adds to a growing list of statewide actions. According to previous filings, New York Attorney General Letitia James has sued Coinbase Financial Markets and Gemini Titan over similar products, while authorities in Arizona, Connecticut, Illinois, Massachusetts and Nevada have issued enforcement actions ranging from lawsuits to cease and desist orders.
The CFTC’s lawsuit against the state of Wisconsin becomes the fifth case against a US state this month, after… Previous actions against New YorkAnd Arizona, Connecticut and Illinois, where the agency continues to say that regulation of prediction markets lies solely at the federal level.
