Wisconsin sues Kalshi prediction market platform, alleging it may be an unlicensed gambling operation

According to an official press release issued by Wisconsin Attorney General Josh Kaul on April 23, Wisconsin has filed a lawsuit in Dane County against Kalshi, alleging that the platform’s prediction market business, which operates in the form of “event contracts,” fits the legal statutory definition of gambling under Wisconsin law and constitutes an unlicensed gambling activity.

Defendant structure and basis for allegations in the three lawsuits

According to Wisconsin’s official complaint, the three lawsuits target three parallel business ecosystems:

First lawsuit: Kalshi and its distribution partners Robinhood and Coinbase (both routing prediction market orders to Kalshi)

Second lawsuit: Polymarket and its affiliated entities

Third lawsuit: Crypto.com and its derivatives division

According to the complaint, all three lawsuits allege that the contracts used by the above platforms allow users to bet money on the outcomes of real-world events; those who guess correctly receive a fixed payout, and the structure aligns with Wisconsin’s statutory gambling definition. The complaint also points out that the platforms’ revenue model charges a transaction fee for each contract, which is the same structure as a casino taking a cut from wagers.

Platform ad copy cited as key evidence

According to Wisconsin’s official complaint, AG Kaul cites each platform’s own advertising materials as the basis for the allegations: Kalshi claims in an Instagram ad to be “the first nationwide legal sports betting platform”; Polymarket’s ads describe it as “a platform where people can bet on future event outcomes.” The complaint also lists specific examples: traders can buy contracts tied to the NCAA championship tournament at prices that reflect implied probabilities, receive a $1 payout for winning positions, and have losing positions reduced to zero. In the press release, AG Kaul said, “Cleverly disguising illegal conduct cannot make it legal.”

CFTC federal jurisdiction claims and states’ positions

According to a CoinDesk report, Kalshi argues that its contracts are swap contracts listed on a regulated exchange and therefore fall exclusively within the CFTC’s jurisdiction. In early April 2026, the U.S. Court of Appeals for the Third Circuit supported Kalshi’s position, ruling that the administrative decision not to block the listing of the relevant contracts has resolved the jurisdictional issue.

States disagree: Nevada says the relevant contracts are “indistinguishable” from gambling; New York State Attorney General Letitia James publicly stated that “every contract is a game of chance.” This Wisconsin lawsuit is the latest state-level action by states against prediction markets, and the jurisdictional conflicts between the states and the federal layer are currently still evolving within ongoing judicial proceedings.

Frequently Asked Questions

Which five platforms has Wisconsin sued, and which court is handling the cases?

According to an official press release issued by Wisconsin AG Josh Kaul on April 23, 2026, the accused platforms are Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com. The lawsuit was filed in the Dane County Court in Wisconsin and involves three lawsuits in total.

What ruling did the Third Circuit make regarding Kalshi’s jurisdictional issue?

According to a CoinDesk report, the Third Circuit ruled in early April 2026 that the administrative decision by the CFTC not to block the listing of Kalshi’s contracts has effectively resolved the jurisdictional issue. The decision supports Kalshi’s claim to federal jurisdiction and creates a legal standoff with the states’ gambling regulatory positions.

What is the central legal dispute in this lawsuit?

According to Wisconsin’s official complaint and the CoinDesk report, the central dispute is whether prediction market event contracts should fall under unified federal regulation by the CFTC or within the scope of state gambling laws. At present, multiple states including Nevada, New York, and Wisconsin take the position that the contracts fall under state gambling law, while a jurisdictional conflict between the federal appellate courts and the states has not yet been resolved by a unified ruling from the highest judicial authority.