CFTC Files Lawsuit in Wisconsin in Response to The State's Lawsuits Against Prediction Market Sites
David Genge Published 29/04/2026
The Commodity Futures Trading Commission (CFTC) has filed suit in Wisconsin to counter that state's attempts to shut down prediction markets from operating in Wisconsin. The CFTC filed suit on Tuesday. Less than a week earlier, Wisconsin filed civil suits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, five CFTC-regulated prediction markets, asserting felony violations of state law.
Wisconsin officials allege in their suit that these prediction market sites are running illegal sports betting operations. The state isn't seeking any monetary compensation through its suit. The lone objective is to get the prediction markets sites to cease operating in Wisconsin.
Wisconsin recently legalized online sports betting
The Wisconsin Department of Justice was filing suit on April 23. It comes at a time when the state government is renegotiating its tribal gaming compact to legalize online sports betting. Under the terms of the agreement, all servers that handle online sports wagering will be located on tribal land.
Wisconsin Attorney General Josh Kaul argued that the state would be going ahead with these lawsuits regardless of the impending legalization of online sports betting in Wisconsin.
“What we are alleging is violations of Wisconsin law," Kaul said. "The allegations would be the same whether or not there had been the new legislation passed."
Are sports event contracts merely illegal sports betting in disguise?
Wisconsin lawmakers are viewing the sports event contracts on offer from prediction markets as nothing more than illegal sports betting.
“Except in limited circumstances, sports betting and other forms of commercial gambling have long been illegal in the state of Wisconsin,” Kaul said while speaking at a news conference, ICT News reported. “No company is above this law, no matter how creatively those companies try to disguise the activity that they’re engaged in.
“These companies have chosen to flout Wisconsin law by thinly disguising the sports betting that they facilitate through what are called event contracts. But our position in this case is that event contracts are no different than ordinary sports bets. The companies collect a fee, we allege, for every bet that’s made, leading them to earn significant revenue from Wisconsinites through violations of our state’s gambling regulations.”
The CFTC is arguing that a state can't overrule a federal regulator
In their suit, the CFTC argues that it is the only legal regulator of prediction market sites. It points out that Congress assigned exclusive jurisdiction over the regulation of various derivative products to the CFTC decades ago. That includes ruling over event contracts traded on designated contract markets, or DCMs. The suit argues that states cannot assert jurisdiction to regulate prediction markets via state gambling laws.
“States cannot circumvent the clear directive of Congress,” CFTC Chairman Michael S. Selig said in a statement.
Echoing Selig's point was one of the leaders of a prediction market site. Coinbase Chief Legal Officer Paul Grewal pointed to an April 6 Third Circuit Court of Appeals ruling. The court determined that states don’t have jurisdiction over prediction markets.
“Congress was clear — consumers deserve uniform, federal oversight over derivatives markets,” Grewal said in a statement. “As the Third Circuit held, state enforcement that seeks to prohibit prediction markets — like Wisconsin’s lawsuit against Coinbase and others — is exactly the patchwork that Congress replaced whole cloth by creating the CFTC.
"Wisconsin should accept clear and consistent CFTC oversight of prediction markets — just as Congress intended.”