Wisconsin filed lawsuits in Dane County against Crypto.com, Polymarket and Kalshi, as well as distribution partners Robinhood and Coinbase, over event contracts. The state alleges the contracts amount to wagers under Wisconsin law; Kalshi argues that federal authority over its exchange-listed contracts rests with the CFTC.
The lawsuits challenge whether prediction-market contracts fall under state gambling law or federal oversight.
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The CFTC proposed rules to strengthen the framework for offering event contracts. The American Gaming Association criticised the proposal, saying it made a “mockery” of existing sports betting laws.
Democratic lawmakers led by Senator Jeff Merkley urged the CFTC to issue rules against insider trading and restrict event contracts involving elections, military activity, government actions and sports. Their letter named Kalshi and Polymarket and called for limits on contracts without a valid economic hedging interest. The CFTC’s consultation on rulemaking was due to close Thursday, the report said.
A Wisconsin federal judge refused the CFTC’s request for a preliminary injunction. The request sought to intervene after state authorities moved against sports prediction-market platforms.
Wisconsin Governor Tony Evers signed an executive order prohibiting state government workers from disclosing or using insider information to benefit personally through prediction markets. The order addresses prediction market contracts and betting; the report says Illinois, New York, Maryland and California have also acted against insider trading on these markets.
Coinbase legal executive Ryan VanGrack said a lawsuit by Wisconsin Attorney General Josh Kaul against prediction-market companies could reach the US Supreme Court. Kaul alleges the platforms offer unregulated sports betting, while VanGrack says federal regulation by the Commodity Futures Trading Commission applies; the CFTC has separately challenged Wisconsin’s authority in court.