Meta description: CFTC and Kalshi appealed a Wisconsin order allowing state gambling enforcement against sports event contracts to proceed.

Tags: CFTC, Kalshi, Wisconsin, Seventh Circuit, American Gaming Association, Polymarket

market_platform: Kalshi

category: Regulation

A federal judge in Green Bay denied the CFTC’s request to block Wisconsin from enforcing its gambling laws against sports event contracts on July 29, 2026. The United States, the Commodity Futures Trading Commission and Kalshi have appealed to the Seventh Circuit, adding another federal appeals court to the industry’s central fight over state gambling law and federal commodities regulation.

What did Judge Griesbach rule in Wisconsin?

U.S. District Judge William C. Griesbach of the Eastern District of Wisconsin denied the federal government’s motion for a preliminary injunction in United States v. Wisconsin, No. 2:26-cv-00749. The 28-page order also denied Wisconsin’s motion to dismiss, Wisconsin’s motion to change venue, and motions to intervene filed by KalshiEX LLC, North American Derivatives Exchange Inc. d/b/a Crypto.com Derivatives North America and the American Gaming Association.

The CFTC and the United States filed the federal case on April 28, 2026, five days after Wisconsin initiated civil enforcement actions against various designated contract markets and futures commission merchants that allow customers to trade contracts based on sports outcomes. Griesbach wrote that the Wisconsin actions included Coinbase, Kalshi, Robinhood, Polymarket and Crypto.com, and sought declarations that the defendants were violating Wisconsin’s commercial gambling statute, Wis. Stat. § 945.03, and creating a public nuisance.

The federal plaintiffs argued that sports-related event contracts are swaps regulated under the Commodity Exchange Act, and that the CEA preempts Wisconsin gambling law as applied to those contracts. Griesbach rejected the request for preliminary relief because, at that stage, he found the CFTC had not shown a likelihood of success on either the swaps question or the preemption question.

Why did the court reject the CFTC’s swaps argument?

The CFTC’s argument turned on the CEA’s definition of “swap,” including contracts whose payment depends on an event or contingency associated with a potential financial, economic or commercial consequence. The agency said sports outcomes can affect ticket sales, advertising, lodging, food and beverage businesses, sponsors and other commercial interests.

Griesbach found that reading too broad. Citing QCX LLC v. Nessel from Michigan and KalshiEX LLC v. Schuler from the Ohio litigation and Sixth Circuit proceedings, he wrote that the CFTC’s approach would sweep in transactions dependent on almost any event with downstream financial consequences. The order found the narrower reading more persuasive at the preliminary-injunction stage: sports event contracts, in the court’s view, were not shown likely to fall within the CEA’s swaps definition merely because sports have economic effects.

The ruling did not dismiss the federal government’s case. Griesbach denied Wisconsin’s standing challenge, holding that the federal government had alleged enough injury to pursue its preemption claim. The immediate consequence was narrower: Wisconsin was not preliminarily barred from continuing to enforce its gambling laws while the case proceeds.

How did the Wisconsin order handle preemption?

Griesbach also held that the CFTC had not shown that the CEA preempts Wisconsin gambling law. The order treated gambling as an area traditionally regulated by states and said the federal plaintiffs had to point to a clear congressional statement before displacing Wisconsin’s police-power authority.

On express preemption, Griesbach rejected the CFTC’s reliance on the CEA’s “exclusive jurisdiction” language. The order adopted the view that the phrase gives the CFTC authority relative to other regulators, not a blanket shield against all state law. On field preemption, the court found no clear evidence that Congress intended the CEA to occupy the full field in a way that would bar Wisconsin from enforcing gambling restrictions. On conflict preemption, Griesbach wrote that Wisconsin law does not force a federally regulated platform to violate federal law because the CEA may permit event contracts without requiring any exchange to list them in every state.

The order also addressed the CFTC’s “impartial access” argument under 17 C.F.R. § 38.151(b). The CFTC said designated contract markets could face a conflict if federal rules required equal access while Wisconsin prohibited access to sports event contracts inside the state. Griesbach found that provision better read as a nondiscrimination rule, not a mandate that every product be offered to every customer in every location.

How does this compare with the Third and Sixth Circuit cases?

The Wisconsin order conflicts with the reasoning of the Third Circuit’s April 6, 2026 decision in KalshiEX LLC v. Flaherty, No. 25-1922, but the appellate landscape is more complicated than a simple two-court split. The Sixth Circuit had already addressed Kalshi’s preemption arguments in KalshiEX LLC v. Schuler, No. 26-3196, through an April 24, 2026 order denying an injunction pending appeal.

In Flaherty, a divided Third Circuit panel affirmed a preliminary injunction blocking New Jersey gaming officials from enforcing state gambling law against Kalshi’s sports-related event contracts. The majority held that Kalshi’s contracts were swaps traded on a CFTC-licensed designated contract market and that both field and conflict preemption barred New Jersey enforcement.

Judge Jane R. Roth dissented. She argued that Kalshi’s sports products were gambling, not the kind of derivatives Congress meant to regulate through the CEA, and that the presumption against preemption should apply because gambling regulation has traditionally belonged to the states.

Griesbach’s Wisconsin order leaned toward that dissenting view and toward the narrower reading reflected in the Ohio and Sixth Circuit proceedings. A published Seventh Circuit merits ruling would matter because it could either reinforce the Third Circuit’s approach or deepen the divide between courts over how far the CEA reaches into state gambling enforcement.

Who appealed the Wisconsin order?

The United States and the CFTC filed a notice of appeal on August 7, 2026, stating that they were appealing the denial of their preliminary-injunction motion. Kalshi filed its own notice of appeal on August 13 from the same July 29 decision and order, including the denial of intervention.

The American Gaming Association filed a separate notice of appeal on August 14. Its appeal is not a challenge to the merits of Griesbach’s refusal to block Wisconsin enforcement. The AGA notice says the trade group appeals only the denial of its motion to intervene and supports the order’s denial of the federal government’s preliminary-injunction request.

Where do Polymarket, Coinbase and Robinhood fit?

The Wisconsin order describes state enforcement actions involving multiple DCMs and FCMs, including Coinbase, Kalshi, Robinhood, Polymarket and Crypto.com. Their regulatory positions are not identical.

Kalshi is a CFTC-licensed designated contract market. Crypto.com’s U.S. derivatives exchange, North American Derivatives Exchange Inc. d/b/a Crypto.com Derivatives North America, is also listed by the CFTC as a designated contract market. Polymarket’s U.S. status changed in 2025: CFTC records list QCX LLC d/b/a Polymarket US as designated on July 9, 2025, and Polymarket announced later that month that it had acquired QCEX for $112 million.

Coinbase’s consumer-facing prediction markets are offered through Coinbase Financial Markets, according to Coinbase Help, with markets operated by Kalshi. Coinbase says those prediction markets are available to U.S. residents except Nevada, subject to market rules and regional restrictions.

Those distinctions matter because a ruling about CFTC-regulated exchanges may not map cleanly onto every platform, broker or affiliate in the same way. Wisconsin’s theory, as described by the Eastern District order, is that sports event contracts offered in the state amount to illegal commercial gambling under Wisconsin law. The CFTC’s theory is that the federal commodities framework governs the relevant contracts and displaces the state enforcement effort.

What other Wisconsin case is moving alongside this fight?

A separate case in the Western District of Wisconsin, Ho-Chunk Nation v. Kalshi Inc., No. 3:25-cv-00698, produced an opinion and order on May 11, 2026. That case involves the Ho-Chunk Nation’s claims against Kalshi and Robinhood over online sports event contracts and turns principally on the Indian Gaming Regulatory Act, not the same CEA preemption posture as United States v. Wisconsin.

Griesbach noted the Ho-Chunk case when he declined to transfer the CFTC’s federal case to the Western District. He wrote that the Ho-Chunk litigation involved IGRA, the Lanham Act and RICO, while those statutes were not at issue in the CFTC’s action.

The next concrete milestone is procedural: the Seventh Circuit will set the briefing path for the CFTC’s and Kalshi’s appeals from the July 29 order, while the AGA pursues its separate appeal over intervention. Until the appeals court rules, Wisconsin has a district-court order leaving its gambling enforcement effort unblocked, and Kalshi has the Third Circuit’s contrary appellate ruling from New Jersey.