The Commodity Futures Trading Commission (CFTC) has taken legal action against Wisconsin officials, challenging their enforcement measures on prediction markets.
The lawsuit, filed with the Justice Department, asserts that Wisconsin’s actions infringe upon the CFTC’s exclusive authority over derivatives and swaps markets.
The lawsuit was lodged in the US District Court for the Eastern District of Wisconsin, marking the fifth state to face legal challenges from the CFTC. According to the complaint, Wisconsin’s recent lawsuits against five prediction market providers, including Kalshi, Robinhood, Coinbase, Polymarket and Crypto.com, disrupted the federal regulatory framework established by Congress for overseeing national swaps markets.
The CFTC criticised Wisconsin’s attempts to criminalise these federally regulated markets.
Josh Kaul, Wisconsin’s Attorney General (pictured), defended the state’s actions, stating: “Unlawful conduct doesn’t suddenly become permissible just because you call it something different.”
He further noted that a bipartisan group of Attorneys General has opposed the federal government’s stance, arguing that the federal intervention undermines state authority to safeguard residents.
The CFTC has initiated similar lawsuits against New York, Connecticut, Illinois and Arizona, all of which have Democratic Governors involved in legal disputes with prediction market providers. The core of the conflict revolves around whether these platforms constitute illegal sports betting or legitimate hedging tools known as ‘swaps’.
The CFTC maintains that prediction markets, which allow users to place bets on various outcomes, fall under its jurisdiction as federally-licensed markets.
Since Mike Selig’s appointment as CFTC Chairman in late 2025, the agency has actively supported prediction market providers, asserting its regulatory domain. To date, only one circuit court has issued a ruling on this matter, with the Third Circuit court upholding an injunction against New Jersey gaming regulators.
The federal government is now seeking an injunction to halt Wisconsin’s enforcement actions, underscoring the ongoing national legal battle over the regulation of prediction markets.
