CFTC, Kalshi Face Setback as Court Backs Wisconsin in Sports Prediction Market Dispute

A federal court has dealt another setback to the Commodity Futures Trading Commission (CFTC) and leading prediction market platforms, including Kalshi and Polymarket, by rejecting efforts to block Wisconsin from enforcing its gambling laws against sports event contracts.

According to the court ruling, the judge denied the CFTC’s request for a preliminary injunction that sought to prevent Wisconsin from pursuing legal action against CFTC-regulated prediction market operators. The court also rejected motions from Kalshi and Crypto.com to intervene in support of the CFTC’s request.

The legal battle began after Wisconsin filed lawsuits in April against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase. State regulators argue that these platforms are offering sports event contracts without the required gaming licenses, making them subject to Wisconsin’s gambling laws despite being regulated by the CFTC.

The CFTC has maintained that it holds exclusive authority over these prediction markets under the Commodity Exchange Act (CEA), arguing that state regulators cannot interfere with federally regulated event contracts. Wisconsin is among several states the agency has challenged in an effort to reinforce its jurisdiction over prediction market platforms.

However, U.S. District Judge William Griesbach indicated that Wisconsin’s commercial gambling statute may indeed apply to sports-related event contracts registered with the CFTC. His comments suggest that the state has a legitimate legal basis to regulate these products, at least while the broader jurisdictional dispute continues.

The ruling echoes a similar decision by Judge Analisa Torres in Kalshi’s case against New York, where the court found that state gambling laws governing sports-related event contracts were not overridden by the Commodity Exchange Act.

Legal analyst Daniel Wallach said the Wisconsin lawsuits are likely to return to state court because complete federal preemption does not apply. If that happens, Wisconsin courts could issue preliminary injunctions preventing Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase from offering sports prediction contracts within the state.

The latest decision adds to the growing legal uncertainty surrounding sports prediction markets as regulators and courts continue to debate whether these products fall under federal commodities law or state gambling regulations.