Federal government sues Wisconsin, illegal sports betting case
MILWAUKEE - The federal government is suing Wisconsin in response to the state's civil lawsuit against several predication markets, arguing Congress has exclusive jurisdiction over regulating such markets.
Wisconsin lawsuit
The backstory:
Wisconsin Attorney General Josh Kaul announced his Department of Justice's lawsuit against prediction markets Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates on April 23.
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Prediction markets allow people to place money on just about anything from world events, like the war in Iran, to politics, like who is going to win the White House in 2028. People can also place money or sports, like who is going to win the World Cup.
Illegal sports betting; Wisconsin DOJ suing Kalshi, other platforms
The Wisconsin DOJ is suing Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates for "alleged facilitation of illegal sports betting, a form of unlawful commercial gambling, in Wisconsin."
Kaul said prediction markets violate Wisconsin law, which makes sports betting illegal except at tribal casinos. The lawsuit, filed in Dane County, asks a judge to declare the companies are breaking the law and that they're a public nuisance that should be blocked from offering sports-related event contracts to Wisconsin customers.
The other side:
The companies named in the lawsuit disagree with the state's claim that they facilitate illegal sports betting in Wisconsin. They say what they offer is an "event contract" – not a bet – and that people are not gambling, but investing and trading shares.
Feds' case
Big picture view:
According to the Commodity Futures Trading Commission, the government entity tasked with regulating derivatives markets, Congress granted the commission exclusive jurisdiction over products like event contracts traded on designated contract markets.
The CFTC said several states, including Wisconsin, have tried to claim jurisdiction to regulate prediction markets through state gambling laws. The commission has sued not only Wisconsin, but Connecticut, Illinois and New York as well.
"States cannot circumvent the clear directive of Congress," CFTC Chair Michael Selig said in a news release. "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 Source: FOX6 News referenced information from the Commodity Futures Trading Commission, the Wisconsin Department of Justice and prior coverage of the state's lawsuit.