CFTC Sues Wisconsin Over Prediction Market Crackdown, Targets Governor Anthony Evers and Josh Kaul

The Commodity Futures Trading Commission (CFTC) sued Wisconsin in federal court after the state moved against prediction market platforms, escalating a dispute over whether event-contract trading falls under state gambling law or federal derivatives regulation.

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The CFTC filed its complaint in the U.S. District Court for the Eastern District of Wisconsin, seeking declaratory and injunctive relief to block Wisconsin’s efforts to apply its gambling laws to federally regulated event contracts.

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In the complaint, the CFTC argued that the Commodity Exchange Act (CEA) gives it “exclusive jurisdiction” over the regulation of commodity futures, options, and swaps traded on federally regulated exchanges.

The CFTC framed the case as a Supremacy Clause dispute, saying Wisconsin’s enforcement efforts “intrude[] on the exclusive federal scheme Congress designed to oversee national swaps markets.”

CFTC Chair Michael Selig said, “States cannot circumvent the clear directive of Congress,” and added, “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.”

Wisconsin’s Attorney General Josh Kaul pushed back, arguing, “[u]nlawful conduct doesn’t suddenly become permissible just because you call it something different,” and calling the federal position a “federal power grab that seeks to limit the ability of states to protect their residents should be rejected.”

The CFTC’s lawsuit targeted Wisconsin Governor Anthony Evers, Kaul, and John Dillet, head of Wisconsin’s Division of Gaming, according to the reporting on the filing.

Wisconsin’s legal action against prediction market platforms set the stage for the CFTC’s lawsuit, with the state alleging that sports event contracts offered through platforms amounted to illegal sports wagering under state law.

Reporting described Wisconsin bringing civil actions against five companies—Coinbase, Crypto.com, Kalshi, Polymarket, and Robinhood—seeking preliminary and permanent injunctions to halt their offerings within Wisconsin.

Bloomberg Law News

The CFTC’s response came after those enforcement steps, with the CFTC asking the federal court to declare Wisconsin’s gambling laws invalid as applied to CFTC-regulated event contracts.

In the state’s framing, the platforms were “disguising wagers as event contracts,” and the Wisconsin filing sought to block the offerings by arguing the companies were “facilitat[ing] … illegal sports betting” while disguising wagers as event contracts.

Wisconsin also argued that its enforcement was necessary because it believes only certain authorized channels can offer sports betting to residents, and the reporting tied that position to Wisconsin’s broader regulatory approach.

The CFTC rejected Wisconsin’s characterization, saying the event contracts “do not fall under the definition of ‘bets’” under Wisconsin law and therefore cannot violate Wisconsin gambling statutes when offered to residents.

The CFTC also argued that continued enforcement would damage its ability to regulate national markets, stating, “Absent an injunction, the United States and the CFTC will suffer irreparable harm.”

The CFTC’s legal theory centers on federal preemption and the scope of its authority under the Commodity Exchange Act, while Wisconsin and its officials argue that calling the products “event contracts” does not change what they are.

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The CFTC complaint says Congress granted it exclusive jurisdiction over derivatives markets, including event contracts listed on designated contract markets, and it argues Wisconsin’s attempt to classify those products as unlawful betting conflicts with federal law.

One report quoted the CFTC’s position that “Wisconsin’s attempt to criminalize and shut down federally regulated markets intrudes on the exclusive federal scheme Congress designed to oversee national swaps markets,” and it also described the CFTC’s request for a permanent injunction prohibiting Wisconsin from taking action against prediction markets.

The CFTC also argued that event contracts do not fall within Wisconsin’s definition of bets, and that the state’s enforcement would interfere with the commission’s ability to regulate national markets.

CFTC Chair Michael Selig repeated the agency’s position in a public statement, saying, “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.”

Wisconsin Attorney General Josh Kaul responded by defending the state’s right to act against companies it believes are violating local law, saying, “[u]nlawful conduct doesn’t suddenly become permissible just because you call it something different.”

Kaul also argued that the federal approach was a “federal power grab” that should be rejected, and he pointed to a “bipartisan group of AGs” opposing the federal government’s asserted authority.

The CFTC’s Wisconsin case is presented as part of a widening federal-state legal campaign that has already reached multiple states and is expected to generate further procedural disputes as cases progress.

Reporting said Wisconsin is now the fifth state sued by the CFTC in roughly a month, after similar actions against Arizona, Connecticut, Illinois, and New York, and it described the New York case as coming shortly after New York sued prediction market operators including Coinbase and Gemini.

Cointelegraph

The CFTC’s strategy is also described as expanding beyond state enforcement by filing amicus briefs, including in Massachusetts, and by securing a temporary restraining order in Arizona that blocked a criminal case against Kalshi.

One report also highlighted a potential procedural wrinkle, noting that the CFTC brought its Wisconsin case in the Eastern District even though the state’s related enforcement actions were pending in the Western District, where the state capital is located.

Another report said the CFTC sued Wisconsin on Tuesday, April 28th, in the U.S. District Court for the Eastern District of Wisconsin (Milwaukee), and it quoted the CFTC’s April 28 press release stating, “Congress assigned exclusive jurisdiction over the regulation of various derivative products to the CFTC decades ago, including over event contracts traded on designated contract markets, or DCMs.”

The reporting also described the CFTC’s complaint as seeking to declare state enforcement invalid and unconstitutional under the Supremacy Clause of 1788, and it said the CFTC is asking the court to deem state enforcement actions invalid.

In parallel, the reporting described Wisconsin’s own enforcement timeline, including that Wisconsin filed lawsuits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase on April 23, and that the CFTC responded less than a week later with its own case.

The CFTC’s lawsuit asks the court to stop Wisconsin from enforcing its gambling laws against CFTC-designated contract markets, and it seeks a permanent injunction as well as declaratory relief.

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Multiple reports described the CFTC’s requested outcome as blocking Wisconsin officials from investigating or enforcing state gambling laws against this kind of trading, and one report said the complaint asks the federal court to declare the state’s gambling laws invalid and to block officials from enforcing their laws against this kind of trading.

Deadspin

The CFTC’s filing also seeks a judgment declaring that the application of state gambling laws against CFTC-designated contract markets violates the Supremacy Clause of the US Constitution, and it seeks a permanent injunction prohibiting Wisconsin from enforcing any state gambling laws against CFTC-designated contract markets.

Wisconsin has not yet responded to the suit in at least one local report, and another report said the state’s earlier suits claimed the platforms were effectively offering sports betting products without authorization under state rules.

The dispute is also framed as potentially heading toward the U.S. Supreme Court, with one report stating that industry observers increasingly expect the U.S. Supreme Court to eventually decide the issue.

In the meantime, the CFTC’s broader campaign could continue to shape how prediction market platforms operate across state lines, because the CFTC argues that state-by-state enforcement makes it “much more difficult for the CFTC to regulate, advise, and enforce its authority.”

As the litigation proceeds, the core question remains whether event contracts are federally regulated derivatives or state-regulated gambling products, and reporting said courts have split on the issue across jurisdictions.