The Commodity Futures Trading Commission (CFTC) is suing Wisconsin after the state filed civil suits against five CFTC-regulated prediction market companies — Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase — asserting felony violations of state law.
Congress assigned exclusive jurisdiction over the regulation of various derivative products - including "designated contract markets" like the prediction market companies in question - to the CFTC decades ago, according to a media release. The CFTC claims some states have "attempted to assert jurisdiction to regulate prediction markets" via state gambling laws.
“States cannot circumvent the clear directive of Congress," CFRC Chairman Michael S. Selig said in the media release. "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."
The Oneida Nation later praised state leaders for taking action.
"There’s a very large disparity between what tribes face and have to do to have regulated gambling in the state of Wisconsin, as opposed to what these prediction markets are putting forth," Oneida Nation Chairman Tehassi Hill said.
Online sports betting is not currently legal in Wisconsin. In-person sports betting is available only at tribal-owned casinos in the state.
State lawmakers recently passed a bill allowing online sports betting as long as the servers that power the websites are located on tribal land in Wisconsin. Governor Evers signed the bill into law and is now tasked with working with all the tribes to implement the changes.
The CFTC’s latest lawsuit comes just a few days after the commission sued New York, right after New York filed its own lawsuit against prediction markets.
In a lawsuit filed by the CFTC, a federal court in Arizona recently issued a temporary restraining order blocking an Arizona criminal prosecution against a CFTC-regulated company. The commission has also filed lawsuits against Connecticut, Illinois, and New York, and has filed briefs in the U.S. Court of Appeals for the Ninth Circuit and the Supreme Judicial Court of Massachusetts.
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