A federal judge has denied the CFTC’s request to block Wisconsin from enforcing the state’s gambling laws against federally regulated prediction market platforms.
summary
- Judge William Griesbach dismissed the charge CFTC Request for Preliminary Injunction v. Wisconsin.
- The court found that contracts for sporting events may fall within it Commercial gambling laws in wisconsin.
- The state of Wisconsin is pursuing cases against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase.
- the The CFTC plans to appeal the ruling And continue to defend its alleged jurisdiction.
Wisconsin court denies CFTC order
Judge William Griesbach of the U.S. District Court for the Eastern District of Wisconsin to reject The Commodity Futures Trading Commission attempts to prevent the state of Wisconsin from enforcing gambling laws on prediction market operators.
The CFTC filed the federal case in April after the state of Wisconsin sued Calci, Polymarket, Crypto.com, Robinhood, and Coinbase. The state of Wisconsin alleges that sports event contracts offered through these platforms amount to unlicensed sports betting.
Griesbach found that the CFTC had not demonstrated that it was likely to succeed on an objective basis, face irreparable harm, or benefit from the equity balance required to issue a preliminary injunction.
The court also denied requests by Calci and Crypto.com to intervene and seek preliminary relief in the federal dispute.
The CFTC argued that contracts for sporting events qualified as swaps under the Commodity Exchange Act and therefore fell under its exclusive federal authority. However, Griesbach concluded that the agency had not proven that sports contracts met the law’s definition of quid pro quos.
This finding alone was sufficient to deny the injunction, according to the court’s reasoning.
State gambling laws may cover sports contracts
Griesbach also rejected the CFTC’s argument that the Commodity Exchange Act prevents Wisconsin from enforcing its gambling laws on CFTC-regulated platforms.
“Wisconsin’s gambling laws neither conflict nor preempt federal commodity regulations,” the judge wrote.
The decision notes that federal registration does not automatically protect a platform from enforcement of state gambling laws when its contracts are tied to sports scores.
Wisconsin Attorney General Josh Kaul has described these contracts as sports bets offered as financial products.
“Thinly concealing illegal conduct does not make it legal,” Cowell said when the state announced its lawsuits in April. “These companies’ alleged facilities for sports betting in the state of Wisconsin must be shut down.”
Legal analyst Daniel Wallach said the five state cases will likely return to Wisconsin courts because federal law does not completely preempt state law. State judges could then consider issuing injunctions preventing the platforms from offering sports contracts in Wisconsin.
The CFTC faces pressure from 44 states
The ruling adds to the broader challenge to the CFTC’s attempt to impose national control over prediction markets.
Attorneys general from 44 states have urged the regulator to do so Withdraw and rewrite proposed amendments For Rule 40.11. Their letter says the framework exceeds the CFTC’s authority under the Commodity Exchange Act and intrudes on the gambling oversight that states have traditionally handled.
Ohio Attorney General Andy Wilson led the coalition that filed its objections as the public comment period ended. The states argued that Congress did not clearly authorize the CFTC to assume control of the sports betting markets.
“States have long regulated gambling — including sports betting. The federal government has not,” the letter states. Files covered by crypto.news.
This dispute is important for users in the United States because access to the platform may increasingly depend on where they live. If state laws apply in conjunction with federal commodity rules, Klshi, Polymarket and similar operators may face different licensing requirements or restrictions across the country.
Conflicting judgments leave prediction markets uncertain
The Wisconsin decision contrasts with the ruling in Minnesota earlier this week.
U.S. District Judge Katherine Menendez temporarily blocked Minnesota’s new prediction market ban after finding that the CFTC, Calci, and PolyMarket were likely to succeed in their federal challenge. The injunction allows the platforms to continue operating in Minnesota while the case is pending, according to news agency.
The varying results leave the industry without a consistent national standard. Courts in Wisconsin and New York have favored state authority, while a Minnesota ruling supports the CFTC’s claim that certain event contracts are subject to exclusive federal oversight.
A CFTC spokesperson said the agency is disappointed with the Wisconsin decision and will appeal. The next phase could determine whether the lawsuits in Wisconsin continue in state court and whether the affected platforms must stop offering sports contracts there.
