CFTC files federal lawsuit against Wisconsin regulators

The Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit in the Eastern District of Wisconsin, seeking declaratory and injunctive relief against multiple regulators within the state. 

On April 24, the Wisconsin Department of Justice (DOJ) filed lawsuits against Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com and affiliated entities in an effort to stop the operators from offering sports-related event contracts. 

According to the DOJ, the contracts at issue pay out based on the outcomes of sports events and function in the same way as ordinary sports bets. 

The lawsuits allege that Kalshi, Robinhood, Coinbase and fellow prediction market operators collect a fee for each transaction, generating revenue from customers in Wisconsin through activity the state considers unlawful gambling.

The CFTC’s lawsuit names Wisconsin Governor Anthony Evers, Attorney General Joshua Kaul and the state’s Division of Gaming, as the Commission looks to “halt” regulators from enforcing preempted state laws to “national markets” which fall under federal authority. 

“The Commodity Exchange Act provides a comprehensive framework for the regulation of commodity derivatives transactions in the US,” the CFTC stated within the lawsuit. 

“This federal law designates the CFTC as the federal agency with ‘exclusive jurisdiction’ over the regulation of commodity futures, options and swaps traded on federally regulated exchanges.”

The action in Wisconsin comes just a day after the CFTC filed a lawsuit against New York, arguing the state overstepped its authority by pursuing legal action against crypto-linked prediction market operators.

The dispute stems from legal action filed by New York Attorney General Letitia James on April 21, which accused Coinbase and Gemini of operating illegal gambling businesses through event-based contracts tied to elections and sports outcomes.