Feds sue Wisconsin over prediction market lawsuits

MADISON — The ​U.S. Commodity ‌Futures Trading ​Commission is suing Wisconsin officials over lawsuits filed last week against behemoth prediction markets Kalshi, Coinbase, Polymarket and others that allege the companies are running illegal gambling schemes in Wisconsin.

The legal challenge from the federal government, filed April 28, is seeking to block the lawsuits in federal court, arguing the state lawsuits are affecting the federal commission’s “ability to apply and enforce its own regulations.”

The federal authorities are asking a federal judge to deem that state laws governing such activity do not apply in areas where the federal commission governs, like prediction markets.

“States cannot circumvent the clear directive of Congress,” Commission Chairman Michael Selig said in a statement. “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.”

Attorney General Josh Kaul filed three separate lawsuits in Dane County Circuit Court on April 23 against the prediction market companies, alleging they are bypassing state laws by characterizing sports bets as “event contracts.” The cases were moved to federal court on April 24.

Kaul said the state is asking the judge overseeing the case to declare such gambling a violation of the law and to be banned in the state. But attorneys representing Kalshi, Coinbase and others argued their operations are governed by federal authorities alone.

The commission has filed lawsuits against Arizona, Connecticut, Illinois and New York on similar grounds.