CFTC Sues Wisconsin Over Sports Prediction Market Crackdown (1)

The Commodity Futures Trading Commission sued Wisconsin officials Tuesday over their enforcement actions involving prediction markets, the fifth state drawing a lawsuit from the US agency charged with overseeing derivatives.

The complaint, filed alongside the Justice Department in the US District Court for the Eastern District of Wisconsin, says that the state’s crackdown last week via lawsuits against five prediction market providers encroach on its turf as the sole regulator of such exchanges.

“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 said in the complaint.

Wisconsin sued Kalshi Inc., Robinhood, Coinbase, Polymarket, and Crypto.com last week, alleging they offered illegal sports betting.

“Unlawful conduct doesn’t suddenly become permissible just because you call it something different,” Wisconsin Attorney General Josh Kaul (D) said in an emailed statement Tuesday. “Tellingly, in other cases, a bipartisan group of AGs has lined up in opposition to the authority the federal government is asserting here. This federal power grab that seeks to limit the ability of states to protect their residents should be rejected.”

The CFTC has similarly sued New York, Connecticut, Illinois, and Arizona—all states with Democratic governors that are locked in litigation with prediction market providers.

States, prediction markets, and the CFTC are engaged in a nationwide legal battle over platforms’ event contracts, mostly related to sports. Prediction markets let users put money on a range of yes-no outcomes, such as whether Democrats will take over the majority of the US House of Representatives in the midterms or whether a particular sports team will win a matchup.

States argue these platforms offer glorified sports betting, providing unlicensed wagering in violation of their laws. Prediction markets and the CFTC counter that these offerings are hedging tools called “swaps” traded on federally-licensed markets, meaning the agency has “exclusive jurisdiction” over them.

After the late-2025 installation of CFTC Chairman Mike Selig, currently its sole commissioner, the agency jumped into the legal fray supporting prediction market providers’ arguments that they’re under its sole purview.

So far only one circuit court has weighed in on the issue, with a split Third Circuit upholding a preliminary injunction against New Jersey gaming regulators.

The federal government seeks an injunction against Wisconsin’s enforcement.

The case is United States v. Wisconsin, E.D. Wis., No. 2:26-cv-00749, complaint filed 4/28/26.