CFTC Sues Wisconsin Over Prediction Market Authority

• CFTC argues event contracts are federally regulated swaps, not gambling, challenging Wisconsin’s enforcement actions against platforms.
• Lawsuit follows similar disputes across New York, Arizona, and others, expanding a broader federal versus state legal battle.
• The agency seeks a permanent injunction to stop state interference and reaffirm exclusive jurisdiction over derivatives markets.

The Commodity Futures Trading Commission filed a lawsuit against the State of Wisconsin this week to block enforcement actions against federally regulated prediction markets. The move follows Wisconsin’s recent cases against platforms including Kalshi and Coinbase. Chairman Mike Selig said the action defends federal authority over derivatives markets.

Federal Regulator Pushes Back on State Enforcement

According to the CFTC, Wisconsin attempted to apply state gambling laws to platforms under federal oversight. The state filed civil suits alleging felony violations tied to event-based contracts. However, the CFTC argues these contracts fall under its exclusive jurisdiction as derivatives products.

Mike Selig stated that states cannot override congressional authority governing financial markets. He added that similar warnings were issued to New York and Arizona. The agency also filed comparable actions in other states and courts to reinforce its position.

Dispute Centers on Classification of Event Contracts

At the core of the dispute is how event-based contracts are classified. The CFTC maintains these instruments qualify as swaps traded on designated contract markets. This classification places them under federal law rather than state gambling statutes.

However, Wisconsin officials argue the contracts resemble betting on real-world outcomes. State filings claim users pay for positions and receive fixed payouts, which aligns with wagering structures. This disagreement drives the ongoing legal conflict between state and federal authorities.

Broader Legal Battle Expands Across Multiple States

The Wisconsin case follows a similar lawsuit filed by the CFTC against New York days earlier. Meanwhile, enforcement actions have also emerged in Connecticut, Illinois, and Nevada. These cases collectively challenge how prediction markets operate across jurisdictions.

Notably, a federal court in Arizona recently issued a restraining order blocking a state prosecution against a regulated company. The CFTC said it seeks a permanent injunction in Wisconsin to prevent further enforcement. Named defendants include Governor Tony Evers and Attorney General Josh Kaul, alongside state gaming officials.

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