A federal judge has rejected the Commodity Futures Trading Commission's (CFTC) request to block Wisconsin from enforcing state gambling laws against federally regulated prediction market platforms. The CFTC had argued that sports event contracts qualify as swaps under the Commodity Exchange Act, but Judge William Griesbach found that the agency had not shown that these contracts meet the law's definition of swaps.
The decision suggests that federal registration does not automatically shield a platform from state gambling enforcement when its contracts are tied to sporting outcomes. Wisconsin Attorney General Josh Kaul has described these contracts as sports bets presented as financial products.
Background on the Case
The CFTC filed the federal case in April after Wisconsin sued Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, alleging that sports event contracts offered through these platforms amount to unlicensed sports betting. The court also rejected requests from Kalshi and Crypto.com to intervene and seek preliminary relief in the federal dispute.
Implications of the Ruling
The ruling adds to a wider challenge to the CFTC's attempt to establish national control over prediction markets. Attorneys general from 44 states have urged the regulator to withdraw and rewrite proposed amendments to Rule 40.11, arguing that the framework exceeds the CFTC's authority under the Commodity Exchange Act and intrudes into gambling oversight traditionally handled by states.
The dispute matters for US users because platform access may increasingly depend on where they live. If state laws apply alongside federal commodities rules, Kalshi, Polymarket, and similar operators could face different licensing requirements or restrictions across the country.
