Wisconsin sued five prediction market platforms and their affiliates Thursday (April 23), alleging that they operate illegal sports betting operations in the state.
The complaints target Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com and their affiliates, the Wisconsin Department of Justice said in a Thursday press release.
“Thinly disguising unlawful conduct doesn’t make it lawful,” Wisconsin Attorney General Josh Kaul said in the release. “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”
Sports betting and other forms of commercial gambling are illegal in Wisconsin, except in limited circumstances, according to the release.
The state’s lawsuits announced Thursday alleges that the defendants flout the law while disguising sports betting as event contracts, and that they engage in unlawful gambling activity by collecting a fee on the “bets” they facilitate, the release said.
The lawsuits seek a declaration that the companies violated state law by creating a public nuisance as well as preliminary and permanent injunctions stopping them from facilitating sports-related event contracts to customers located in Wisconsin, per the release.
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Reached by PYMNTS, Kalshi said in an emailed statement: “As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction. It’s very different from what state-regulated sportsbooks and casinos offer their customers. We are confident in our legal arguments.”
A Robinhood spokesperson told PYMNTS in an emailed statement: “As we’ve previously shared, Robinhood’s event contracts are federally regulated by the CFTC [Commodity Futures Trading Commission] and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant and regulated manner. We intend to defend ourselves against these claims.”
Coinbase Chief Legal Officer Paul Grewal said in a Thursday post on LinkedIn that Congress made it clear that consumers deserve federal oversight over derivatives markets and that the Third Circuit held that state actions against prediction markets create the kind of patchwork that Congress replaced with its creation of the CFTC.
“Wisconsin should accept clear and consistent CFTC oversight of prediction markets — just as Congress intended,” Grewal said in his post.
Neither Polymarket nor Crypto.com immediately replied to PYMNTS’ request for comment.
The CFTC filed lawsuits against Arizona, Connecticut and Illinois on April 2, saying the states have taken actions that intrude on the regulator’s exclusive jurisdiction to regulate prediction markets.
