Wisconsin Sues Kalshi, Polymarket, Coinbase Over Sports Betting Contracts

The Wisconsin Department of Justice filed three complaints on Thursday in Dane County against Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com, alleging that their sports-related event contract offerings constitute illegal gambling under state law. Wisconsin Attorney General Josh Kaul stated that the companies’ “thinly disguising unlawful conduct doesn’t make it lawful.” The state seeks declaratory judgments and injunctions to bar the defendants from offering such contracts to Wisconsin residents.

Complaint Details

According to the complaint against Kalshi, Robinhood, and Coinbase, the three companies offered sports-related event contracts that function identically to traditional sports wagers. Wisconsin residents could place bets on NCAA tournament outcomes, including which team would win a Final Four matchup, which team would cover the point spread, and which team would first score ten points, with the companies collecting a fee for each transaction.

The complaint against Polymarket alleges similar conduct, asserting the platform offers sports-related event contracts to Wisconsin customers that amount to illegal bets under state law.

In the complaint against Crypto.com and its affiliates, the state alleged that the exchange offers moneyline, point spread, and totals contracts on professional and college sports. Crypto.com charges exchange fees of $0.02 per $1 contract and $0.10 per $10 contract, plus technology fees on certain transactions.

Legal Violations Alleged

Across all three complaints, the DOJ alleges that each company violates Wisconsin state laws by receiving or forwarding bets for gain, becoming a custodian of wagered funds for gain, and using wire communication facilities to facilitate betting for gain.

Relief Sought

The state is seeking identical relief across the three complaints: declaratory judgments that the companies’ sports-related event contracts violate Wisconsin’s commercial gambling statute, plus preliminary and permanent injunctions barring each defendant from offering such contracts to customers located in the state. The Wisconsin DOJ does not seek to void or invalidate outstanding sports-related event contracts where a Wisconsin customer is a party; the state seeks only prospective relief.

Broader Regulatory Escalation

Wisconsin is the latest state to target prediction markets as regulatory scrutiny intensifies. On Tuesday, New York Attorney General Letitia James sued Coinbase and Gemini, alleging their prediction market platforms constitute illegal gambling operations. The New York complaint took particular issue with the platforms allowing users between the ages of 18 and 21, while New York law requires bettors to be 21 for mobile sports wagering. The state is seeking a minimum of $2.2 billion from Coinbase and $1.2 billion from Gemini, according to court documents.

On the same day, New York Governor Kathy Hochul signed an executive order banning state employees from using nonpublic information obtained through official duties to bet on prediction markets. Illinois Governor JB Pritzker issued a similar executive order on Tuesday.

Other states have taken legal action. Tennessee and Arizona have sued to prevent Kalshi from offering certain markets, while Arizona, Connecticut, and Illinois have issued cease-and-desist orders against prediction market operators.

Federal Response

On April 3, the Commodity Futures Trading Commission sued Connecticut, Arizona, and Illinois, challenging their efforts to regulate prediction market operators, including Kalshi and Polymarket. CFTC Chairman Michael S. Selig stated that the agency will “safeguard its exclusive regulatory authority over these markets” and that Congress “rejected such a fragmented patchwork of state regulations.”