CFTC Sues Wisconsin Over Prediction Market Ban

Key Takeaways:

• The CFTC sued Wisconsin on April 28, 2026, defending Kalshi and Polymarket against state gambling law enforcement.
• Wisconsin AG Josh Kaul filed 3 lawsuits on April 23 targeting platforms earning over $1 billion annually from sports contracts.
• The CFTC has now sued 5 states in April 2026, with the conflict expected to reach the U.S. Supreme Court.

CFTC Sues Wisconsin to Stop State From Closing Prediction Markets

Wisconsin Attorney General Josh Kaul filed three civil lawsuits in Dane County Circuit Court on April 23 against Kalshi, Polymarket, Foris Dax Markets/ Crypto.com, and affiliated companies, including Robinhood and Coinbase. The state argues that sports-outcome contracts offered by these platforms constitute illegal sports betting under Wisconsin law, specifically Wis. Stat. 945.03(1m), a Class I felony.

Kaul framed the dispute plainly. “Thinly disguising unlawful conduct doesn’t make it lawful,” he said. “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”

The CFTC fired back days later. Chairman Michael Selig said states cannot override Congress. “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,” he remarked.

At the center of the fight is whether event contracts, financial instruments that pay out based on real-world outcomes like sports results or elections, qualify as CFTC-regulated derivatives or illegal gambling under state law. Kalshi, a CFTC-registered designated contract market, treats these products as federally authorized swaps subject to CFTC consumer protection rules. Wisconsin treats them as bookmaking.

The CFTC argues Congress gave it exclusive jurisdiction over derivatives traded on registered exchanges specifically to prevent a state-by-state regulatory patchwork. The agency contends Wisconsin’s suits do exactly what Congress prohibited when it created the CFTC framework decades ago.

Wisconsin’s complaints cite Kalshi’s earnings as evidence of scale. According to court filings, the platform earns more than $1 billion annually from sports contracts, which account for roughly 90% of its revenue.

This case fits a pattern the CFTC has pursued across multiple states in April 2026. The agency previously sued Arizona, Connecticut, Illinois, and New York over similar enforcement actions against prediction market platforms. In Arizona, the CFTC secured a temporary restraining order. The Third Circuit Court of Appeals has also issued precedent that platforms and the CFTC cite as supporting federal preemption.

Coinbase Chief Legal Officer Paul Grewal, along with representatives from Robinhood and Kalshi, has pushed back against state actions, arguing that CFTC registration and federal oversight make state gambling laws inapplicable to their operations.

Polymarket, which incorporates crypto elements and serves U.S. users, faces additional scrutiny given its structure, though the CFTC has also moved to defend its access against state interference.

Wisconsin permits sports betting only through limited tribal gaming compacts, leaving most online sports wagering illegal in the state. That restriction underpins Kaul’s argument that prediction markets offering sports contracts operate outside the law regardless of federal registration status.

Legal analysts widely expect the conflict to reach the U.S. Supreme Court. A definitive ruling would settle whether sports event contracts belong under CFTC authority or fall within state gambling jurisdiction, a question that platforms, regulators, and state governments have so far answered differently.

Until courts resolve the dispute, users in states with active litigation face potential access restrictions, while platforms regulated by the CFTC continue operating under federal authority.