The U.S. Commodity Futures Trading Commission has officially filed a lawsuit in the Eastern District of Wisconsin Federal Court, seeking to halt the state's enforcement actions against five predictive market platforms and declaring Wisconsin's actions unconstitutional under the Supremacy Clause of the federal constitution. This sharp counterattack occurred just days after Wisconsin Attorney General Josh Kaul filed civil lawsuits against Coinbase, Crypto.com, Kalshi, Polymarket, and Robinhood, escalating what seemed like a routine local legal dispute into a constitutional judicial confrontation between federal and state governments. CFTC Chairman Michael Selig issued the same warning in a press release to Wisconsin as he did to New York, Arizona, and other states—if you interfere with the operation of federal law in financial market regulation, we will sue you. Wisconsin thus became the fifth state sued by the CFTC within a month, following Arizona, Connecticut, Illinois, and New York.
Federal Exclusive Jurisdiction vs. State Gambling Laws, Supremacy Clause as the Core Weapon
The core argument constructed by the CFTC in the lawsuit goes straight to the point. The federal regulatory agency asserts that Congress had granted exclusive jurisdiction over various derivative products listed on designated contract markets to the CFTC decades ago, and Wisconsin's attempt to classify these products as illegal gambling not only conflicts with federal law but also directly interferes with the nationally regulated markets overseen by the Commission. The lawsuit further points out that event contracts do not fall within the state's definition of gambling, thus offering such products to residents does not violate Wisconsin's gambling regulations. The CFTC explicitly warns the court that without an injunction, the U.S. government and the CFTC will suffer irreparable harm.
Wisconsin Attorney General Kaul responded immediately. He argued that illegal activities do not become legal simply by changing their name and pointed out an interesting bipartisan phenomenon—in other similar cases, a coalition of bipartisan state attorneys general has already jointly opposed the federal government's claimed powers in such matters. Kaul characterizes the CFTC's lawsuit as a federal power expansion, believing that this attempt to limit states' ability to protect their residents should be resolutely resisted.
Arizona Criminal Prosecution and Wisconsin Tribal Licensing Crossfire
Wisconsin's involvement makes the national landscape of this legal battle clearer. In Arizona, the dispute has escalated from civil litigation to criminal charges against Kalshi, and a federal court subsequently issued a temporary restraining order temporarily preventing the state from continuing criminal prosecution. The CFTC has also submitted amicus curiae briefs to multiple courts, including the Ninth Circuit Court of Appeals and the Massachusetts Supreme Judicial Court, displaying a full-scale legal offensive. Selig, who took office in January this year, has clearly stated that the agency will actively challenge states' attempts to regulate federal regulatory platforms, a strategy that is moving from verbal statements to systematic judicial actions.
Meanwhile, Wisconsin's own gambling policy is also undergoing structural transformation. Governor Tony Evers signed legislation earlier this month allowing online sports betting statewide, but this system must rely on servers on tribal land and operate through renegotiated gambling contracts with the federally recognized eleven tribes. This timing suggests that while Wisconsin is cautiously expanding the boundaries of legal gambling through the tribal model, it is trying to keep federally regulated prediction markets out, a policy stance that could become a breakthrough point for the CFTC in attacking state consistency in court.
PASA Official Website continues to track the latest legal developments in the federal and state jurisdictional disputes over the U.S. prediction markets, noting that under Selig's leadership, the CFTC has formed a clear judicial strategy—not passively waiting for states to sue platforms before intervening, but actively initiating constitutional challenges against states' enforcement actions. The verdict in the Wisconsin case will provide the next key case coordinate for the ongoing federal-state power struggle across the United States.
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