CFTC sues Wisconsin to block state crackdown on prediction markets

The Commodity Futures Trading Commission filed a federal lawsuit against the state of Wisconsin on Tuesday seeking to block Wisconsin’s legal actions targeting five prediction market platforms: Polymarket, Kalshi, Coinbase, Robinhood and Crypto.com. Wisconsin had filed its complaints on Friday, alleging the platforms’ sports-related markets amount to unlicensed sports betting.

The CFTC says the markets at issue are event contracts governed by the Commodity Exchange Act and therefore fall under federal jurisdiction. The agency asked a federal court to bar Wisconsin from enforcing state gambling laws against trading in those contracts. Wisconsin’s attorney general contends the sports markets are illegal bets that should be regulated and licensed under state law.

The filing in Wisconsin follows a series of similar federal actions. In recent weeks the CFTC has sued Illinois, Arizona and Connecticut after those states pursued enforcement under state gambling statutes, and on Friday the agency sued New York after that state moved against certain exchanges. Those state complaints have targeted sports markets and, in some cases, markets tied to elections and popular culture.

CFTC Chair Mike Selig wrote in a statement that “States cannot circumvent the clear directive of Congress. Our message to Wisconsin is the same as to New York, Arizona, and others: if you interfere with the operation of federal law in regulating financial markets, we will sue you.” The agency has used federal courts to seek a uniform ruling on whether the products are regulated as commodities.

The legal dispute has drawn attention from officials across the political spectrum. The states targeted so far have Democratic governors and attorneys general, while the CFTC is led by Mike Selig, a Trump appointee. Several Republican-led states, including Tennessee, Utah and Ohio, have also expressed opposition to the CFTC’s position in other proceedings.

Wisconsin’s complaints focused on sports-related markets, but other state suits have broader scopes that include political and entertainment contracts. The filings ask courts to determine whether state gambling laws apply or whether federal commodity rules govern these types of event contracts.