The Commodity Futures Trading Commission sued Wisconsin on April 28, asking a federal court to stop the state from applying gambling law to CFTC-regulated prediction markets. The case, United States of America v. State of Wisconsin, followed Wisconsin Department of Justice actions against Kalshi, Polymarket, Coinbase, Robinhood, Crypto.com and related entities over sports-event contracts.
What is the CFTC asking the Wisconsin federal court to decide?
The CFTC’s April 28 press release said the agency filed suit in the U.S. District Court for the Eastern District of Wisconsin to “reaffirm its exclusive jurisdiction over prediction markets.” The federal docket lists the case as United States of America et al. v. State of Wisconsin et al., No. 2:26-cv-00749, with the United States and the CFTC as plaintiffs and the State of Wisconsin and Attorney General Josh Kaul as defendants.
The agency’s position is straightforward: event contracts traded on federally regulated derivatives markets fall within the Commodity Exchange Act, and state gambling enforcement cannot shut down those markets on a state-by-state basis. CFTC Chairman Michael S. Selig said in the agency’s April 28 release that “States cannot circumvent the clear directive of Congress,” framing Wisconsin as part of a broader state-federal conflict over who regulates event contracts.
Wisconsin has taken the opposite view. In its April 23 announcement, the Wisconsin Department of Justice said it was suing Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com and their affiliates to halt alleged illegal sports betting in the state. The department described the contracts as sports betting conducted through “event contracts,” and Attorney General Kaul said the companies’ alleged facilitation of sports betting “should be shut down.”
Which Wisconsin cases are in play?
The public record shows several related Wisconsin tracks, not one simple enforcement action. The CFTC’s federal case in the Eastern District of Wisconsin was filed April 28 and assigned to U.S. District Judge William C. Griesbach, according to the Justia docket for No. 2:26-cv-00749. That docket identifies North American Derivatives Exchange Inc., doing business as Crypto.com Derivatives North America, and KalshiEX LLC as intervenors.
Separately, Wisconsin filed at least one action that moved into the Western District of Wisconsin. The Justia docket for State of Wisconsin v. Kalshi, Inc. et al., No. 3:26-cv-00378, lists the State of Wisconsin as plaintiff and names Kalshi entities, Robinhood entities, Coinbase Financial Markets Inc. and related defendants. The docket states that the case was filed April 24 and that Wisconsin filed a motion for preliminary injunction on June 9.
Wisconsin Examiner reported on April 23 that the state filed three suits: one naming Kalshi entities, Robinhood entities and Coinbase companies; a second naming companies doing business as Polymarket or affiliates of Polymarket; and a third naming Foris DAX Markets and North American Derivatives Exchange Inc., doing business as Crypto.com. That structure matters because the litigation is aimed at platform families and affiliated legal entities, not just consumer-facing brand names.
Why does the Third Circuit ruling matter?
The strongest appellate authority for Kalshi and the CFTC’s preemption theory is now the Third Circuit’s April 6 decision in KalshiEX LLC v. Flaherty, No. 25-1922. The court affirmed a preliminary injunction blocking New Jersey officials from enforcing state gambling law against Kalshi’s sports-related event contracts.
In that opinion, the Third Circuit held that Kalshi had shown a reasonable chance of success on its argument that the Commodity Exchange Act preempts New Jersey enforcement against sports-related event contracts traded on a CFTC-licensed designated contract market. The court said both field preemption and conflict preemption supported the injunction at the preliminary stage.
That decision does not bind federal district courts in Wisconsin, which sit in the Seventh Circuit. It does, however, give CFTC-regulated platforms a detailed appellate ruling to cite as states press gambling-law theories in other jurisdictions. Wisconsin, like New Jersey, argues that sports contracts function as wagers on sporting outcomes. Kalshi and federal regulators argue that the contracts are derivatives under federal law when listed on CFTC-regulated markets.
How does the Wisconsin fight fit with other state challenges?
The Wisconsin case is part of a national escalation over sports and event contracts. In its April 28 release, the CFTC said it had recently sued New York after that state filed its own lawsuit against prediction markets. The agency also pointed to lawsuits against Connecticut, Illinois and Arizona, plus amicus filings in the Ninth Circuit and the Massachusetts Supreme Judicial Court.
Minnesota added another live front this week. The Associated Press reported on July 29 that U.S. District Judge Katherine Menendez temporarily blocked implementation of a Minnesota law that would have banned prediction markets. AP reported that the ruling favored the CFTC, Kalshi and Polymarket, which argued that federal law gives the commission exclusive authority over event-contract transactions.
Those cases are not identical. Some involve state enforcement actions under existing gambling statutes, while Minnesota involved a new state law aimed directly at prediction markets. The common issue is whether CFTC oversight of event contracts leaves room for states to enforce gambling restrictions against platforms offering contracts tied to sports, elections or other real-world outcomes.
What does Wisconsin law say about sports betting?
Wisconsin’s position rests on its state gambling laws and its view that sports-event contracts pay out like wagers. The Wisconsin Department of Justice said in its April 23 announcement that, except in limited circumstances, sports betting and other forms of commercial gambling have long been illegal in the state.
The DOJ’s theory is that platform terminology does not control the legal character of the transaction. If a contract pays based on the outcome of a sporting event, the state argues that Wisconsin gambling restrictions apply unless federal law displaces them. That is the statutory and constitutional collision now before federal courts: the state says it is enforcing traditional gambling law, while the CFTC says Wisconsin is interfering with federally regulated derivatives markets.
What is happening with the Ho-Chunk Nation case?
A separate Wisconsin case involves tribal gaming law rather than direct state enforcement. In Ho-Chunk Nation v. Kalshi Inc., No. 3:25-cv-00698, U.S. District Judge William M. Conley issued a May 11 opinion and order in the Western District of Wisconsin that narrowed the case but allowed part of it to continue.
The order granted in part and denied in part motions to dismiss. It dismissed the Ho-Chunk Nation’s Lanham Act and Racketeer Influenced and Corrupt Organizations Act claims, dismissed Robinhood entities as defendants, denied the tribe’s request for a preliminary injunction and allowed other claims, including the Indian Gaming Regulatory Act theory, to proceed. The court’s docket sets later case milestones, including dispositive motions due November 10, 2026, and trial scheduled for May 24, 2027.
That tribal case is distinct from the CFTC’s lawsuit against Wisconsin and the state’s actions against platform entities. It still adds pressure to the same core industry question: whether sports-event contracts can be treated as federally regulated derivatives while avoiding state or tribal gaming-law limits.
What is the next practical milestone?
The immediate stakes are procedural and commercial. Wisconsin has asked federal courts to let it pursue injunctions against sports-related event contracts offered to in-state users, while the CFTC has asked a federal court to protect federally regulated markets from state gambling enforcement.
The next concrete dates will come from the federal dockets in Wisconsin, including briefing and rulings on Wisconsin’s preliminary-injunction motion in State of Wisconsin v. Kalshi, Inc. et al., No. 3:26-cv-00378, and further proceedings in the CFTC’s Eastern District case, No. 2:26-cv-00749. For platforms, the practical question is whether they can continue offering sports-event contracts in Wisconsin while the courts decide how far the Commodity Exchange Act reaches.
