Wisconsin becomes latest battleground in CFTC's prediction market jurisdiction dispute
The CFTC has taken legal action against Wisconsin, making it the fifth state targeted in the agency's campaign to establish jurisdiction over prediction markets and prevent state interference.
On Tuesday, the US Commodity Futures Trading Commission initiated legal proceedings against Wisconsin in what represents the agency's most recent attempt to establish federal authority over prediction markets following the state's legal action against several platforms operating in this space.
According to a statement released by the CFTC, the agency brought the lawsuit against Wisconsin "in response to the state's lawsuits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, five CFTC-regulated prediction markets."
"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."
CFTC Chairman Michael Selig
This marks the fifth instance in which the agency has initiated litigation against a US state in an effort to prevent enforcement actions targeting prediction markets. Last Friday, the CFTC brought a lawsuit against New York, and earlier in the month, the agency filed similar legal actions against Arizona, Connecticut, and Illinois following those states' lawsuits against various prediction market platforms.
Last Thursday, Wisconsin initiated lawsuits against the five companies, and similar to numerous other US state regulatory authorities, contended that prediction markets providing contracts on sports-related events constitute illegal gambling activities that necessitate state-issued gaming licenses.
This position has been consistently challenged by both the platforms themselves and the CFTC in previous instances, with both parties maintaining that these contracts fall exclusively under federal regulatory oversight.
In its most recent legal filing, submitted jointly with the Justice Department's Civil Division to a Wisconsin federal court, the CFTC contended that it possesses "exclusive jurisdiction" over event contracts offered on prediction markets, which are regulated as designated contract markets according to federal legislation.
"Wisconsin's attempt to criminalize and shut down federally regulated markets intrudes on the exclusive federal scheme Congress designed to oversee national swaps markets."
CFTC complaint
The regulatory agency requested that the court determine that state-level gambling statutes do not have applicability to CFTC-regulated designated contract markets and grant a permanent injunction that would bar Wisconsin from pursuing enforcement actions against prediction market platforms.
In addition to the state itself, the CFTC's legal complaint specifically identified Wisconsin Governor Anthony Evers, Wisconsin Attorney General Josh Kaul and the Wisconsin Gaming Division and its administrator, John Dillett.
Requests for comment were sent to the Wisconsin Department of Justice, the state's Division of Gaming and the office of Governor Evers.