CFTC Sues Wisconsin Over Prediction Market Jurisdiction

The Commodity Futures Trading Commission filed a lawsuit Tuesday against Wisconsin Democratic Gov. Tony Evers, Attorney General Joshua Kaul, and John Dillett, administrator of the Wisconsin Department of Administration Division of Gaming, in the U.S. District Court for the Eastern District of Wisconsin. The action follows Wisconsin’s complaints filed last week against Coinbase, Robinhood, Crypto.com, Polymarket, and Kalshi over sports-related event contract offerings.

CFTC’s Jurisdictional Claims

In its complaint, the CFTC asserted its “exclusive jurisdiction” over prediction markets, stating that “Wisconsin’s attempt to criminalize and shut down federally regulated markets intrudes on the exclusive federal scheme Congress designed to oversee national swaps markets.” The agency is asking the Wisconsin court to issue an injunction and declare that “Wisconsin gambling and betting bans or regulations are preempted by federal law as applied to event contract swaps listed for trading on CFTC-regulated DCMs.”

Escalating Federal-State Conflict

Wisconsin is now the fifth state sued by the CFTC in the past month over prediction market oversight. The agency has also filed lawsuits against Illinois, Arizona, Connecticut, and New York during the same period. CFTC Chair Michael Selig has embarked on rulemaking efforts, asserting the agency has a broad statutory mandate despite pushback from states that argue platforms are violating local gaming and gambling laws.

State Coalition Response

A bipartisan coalition of 37 attorneys general, including those from New York and Oklahoma, filed an amicus brief last week urging a Massachusetts court to uphold a January ruling that Kalshi cannot offer sports event contracts to in-state residents without a Massachusetts Gaming Commission license. The coalition, represented alongside New York Attorney General Letitia James, stated: “If Congress meant to overturn the long tradition of state regulation over gambling that dates to the founding of the country, it needed to have said so clearly. As Attorney General James and the coalition argue, the CFTC cannot claim exclusive authority to regulate the multibillion-dollar gambling industry based on a provision of law that does not even mention gambling at all.”