The Commodity Futures Trading Commission (CFTC) of the United States has initiated legal action against officials in Wisconsin to halt state-level lawsuits aimed at prediction market platforms such as Kalshi, Coinbase, and Polymarket.
The federal lawsuit, lodged on Tuesday, aims to prevent recent lawsuits from Wisconsin authorities. The CFTC claims that these state actions impede its mandate to oversee financial markets, according to the Milwaukee Journal Sentinel.
The CFTC argues that prediction markets are under the jurisdiction of federal law and should not be governed by state gambling statutes.
Michael Selig, the Chairman of the CFTC, emphasized the necessity of these lawsuits to restrict states from overreaching. “States cannot sidestep the explicit directives set by Congress,” Selig stated. “Our warning to Wisconsin is identical to that conveyed to New York, Arizona, and other states: any interference with federal authority in regulating financial markets will result in legal action.”
This legal battle is a continuation of three lawsuits filed on April 23 by Wisconsin Attorney General Josh Kaul in Dane County Circuit Court. Kaul accused the companies of running illicit gambling operations while disguising sports betting products as “event contracts.” These cases were shifted to federal court the next day.
Kaul stands by the state’s assertions, asserting that rebranding gambling operations does not exempt companies from adhering to state laws.
“Illegal actions do not become lawful simply by changing their names,” Kaul remarked. He also noted that a bipartisan coalition of state attorneys general has voiced opposition against the federal government’s approach, labeling it an overextension that undermines the states’ capacity to safeguard their residents.
Wisconsin is requesting a court decision to classify these activities as illegal and to ban them within its jurisdiction. Nevertheless, attorneys representing Kalshi, Coinbase, and other entities maintain that their operations remain under exclusive federal regulation.
This conflict is part of a wider legal initiative by the CFTC, which has also filed lawsuits against Arizona, Connecticut, Illinois, and New York regarding attempts to regulate prediction markets on a state level.
Ryan VanGrack, Senior Legal Executive at Coinbase, noted that the federal action marks a significant change. “By seeking to block state encroachment, the CFTC has unmistakably signaled: the phase of jurisdictional ambiguity has concluded,” stated VanGrack, who leads the legal division at Coinbase. “Federal law is not merely guidance—it is the sole authority overseeing these markets.”