A Wisconsin federal judge has rejected the Commodity Futures Trading Commission’s bid to stop the state from enforcing its gambling laws against platforms offering prediction markets tied to sports events. This setback complicates the CFTC’s efforts to maintain exclusive federal oversight of these products.
Judge Rules Against Preliminary Injunction
Judge William Griesbach ruled that the CFTC failed to show it was likely to win on the merits or suffer irreparable harm without injunction. He also found no basis to prioritize federal authority over Wisconsin’s commercial gambling statutes in this case.
The dispute began after Wisconsin sued major platforms including Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, accusing them of operating unlicensed sports betting through event contracts. The CFTC counters that these contracts are swaps under the Commodity Exchange Act and thus federally regulated.
However, the court disagreed. It determined the CFTC had not demonstrated that these sports event contracts meet the legal definition of swaps, a key point in denying the injunction. The judge also rejected intervention requests by Kalshi and Crypto.com in the federal lawsuit.
State Gambling Laws May Apply to Federally Regulated Platforms
Wisconsin’s Attorney General Josh Kaul criticized the platforms for disguising sports betting as financial products, stating, “Thinly disguising unlawful conduct doesn’t make it lawful.”
Judge Griesbach emphasized that Wisconsin’s gambling laws do not conflict with federal commodities regulations and therefore are not preempted. This ruling implies that even federally registered platforms can face state enforcement if their contracts are linked to sporting outcomes.
The CFTC plans to appeal the decision and continue defending its jurisdiction, signaling ongoing legal battles over the boundaries between federal and state regulatory authority in prediction markets.
This material is for informational purposes and does not constitute financial advice.
