Regulatory Crackdown: Federal Agency Sues Badger State for Allowing Uncertified Betting Exchanges

Table of Contents On Tuesday, the CFTC launched legal proceedings against Wisconsin following the state’s targeting of five prediction market operators for purportedly conducting unlicensed gambling activities. The federal regulator maintains that state legislation has no authority in this domain. 🚨LATEST: The CFTC just sued the State of Wisconsin for "encroaching" on its exclusive federal authority over prediction markets. That makes 3 states sued by the federal government in weeks: Illinois, New York, now Wisconsin. States want control. The CFTC won't give an inch. pic.twitter.com/3CmbIIUmjA — Coin Bureau (@coinbureau) April 29, 2026 Last Thursday, Wisconsin initiated litigation against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase. State authorities contended that prediction market platforms facilitating sports-related event contracts constitute prohibited wagering activities under Wisconsin gaming statutes. The CFTC’s response was swift. The agency submitted its complaint to the U.S. District Court for the Eastern District of Wisconsin, with support from the Justice Department’s Civil Division. This marks the fifth state lawsuit the CFTC has initiated this month concerning prediction market jurisdiction. The agency previously filed actions against New York, Arizona, Connecticut, and Illinois. CFTC Chairman Michael Selig has spearheaded this litigation campaign. He currently serves as the only sitting member of what should be a five-commissioner body. In a public statement, Selig declared: “States cannot circumvent the clear directive of 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.” The CFTC maintains that prediction markets constitute derivatives trading activity. According to the agency, these financial instruments belong under federal supervision as designated contract markets, placing them outside state gambling jurisdiction. At the heart of this legal confrontation lies a fundamental question: which level of government possesses regulatory authority over prediction markets? The CFTC contends that Congressional legislation granted it exclusive control over these contract types. State governments hold a different position. They characterize sports-related event contracts as gaming products requiring state-issued gaming permits. Multiple states have launched both civil litigation and criminal prosecutions against these platforms. In Arizona, judicial authorities recently halted criminal proceedings against Kalshi. The presiding judge indicated the CFTC appears likely to prevail in demonstrating that federal statutes take precedence over state gaming regulations. In its Wisconsin filing, the CFTC identified Governor Anthony Evers, Attorney General Josh Kaul, and the Wisconsin Gaming Division as respondents. The regulator requested judicial determination that state gambling statutes do not extend to federally supervised prediction markets. Additionally, it sought a permanent injunction preventing Wisconsin from pursuing enforcement actions against these platforms. Coinbase and Robinhood, both exchange-listed corporations, appear among the platforms targeted in Wisconsin’s state litigation. Gemini was separately identified in New York’s legal action against Coinbase. New York filed suit against Coinbase and Gemini last week regarding their prediction market services. The CFTC countered with its own lawsuit against New York within days. The Wisconsin Department of Justice, the Division of Gaming, and Governor Evers’ office had not issued responses to media inquiries at the time of this report.