The Commodity Futures Trading Commission has filed a federal lawsuit against Wisconsin after the state moved against several prediction market platforms, marking the latest clash over whether states or federal regulators control event-contract trading.

Wisconsin recently brought civil actions against five companies — Coinbase, Crypto.com, Kalshi, Polymarket and Robinhood — alleging that sports event contracts offered through their platforms amount to illegal sports wagering under state law. The state is seeking preliminary and permanent injunctions to halt those offerings within Wisconsin.

Days later, the CFTC responded with its own case in U.S. District Court for the Eastern District of Wisconsin, asking the court to block state enforcement efforts and declare Wisconsin’s actions unconstitutional under the Supremacy Clause.

Federal Agency Claims Exclusive Authority

The CFTC argues Congress granted it exclusive jurisdiction decades ago over many derivative products, including event contracts listed on designated contract markets.

According to the federal complaint, Wisconsin’s attempt to classify those products as unlawful betting conflicts with federal law and interferes with markets overseen by the commission.

“Wisconsin’s attempt to criminalize and shut down federally regulated markets intrudes on the exclusive federal scheme Congress designed to oversee national swaps markets,” the filing states.

The complaint also says event contracts do not fall within the state definition of bets and therefore cannot violate Wisconsin gambling statutes when offered to residents.

Federal regulators further argued that continued enforcement by Wisconsin would damage the commission’s ability to regulate national markets.

“Absent an injunction, the United States and the CFTC will suffer irreparable harm.”

CFTC Chair Michael Selig repeated the agency’s position in a public statement.

“States cannot circumvent the clear directive of Congress,” said Chairman Michael S. Selig in a press release. “Our message to Wisconsin is the same as to New York, Arizona, and others: if you interfere with the operation of federal law in regulating financial markets, we will sue you.”

Wisconsin Attorney General Josh Kaul pushed back against the federal lawsuit and defended the state’s right to act against companies it believes are violating local law.

“[u]nlawful conduct doesn’t suddenly become permissible just because you call it something different,” Kaul said.

“Tellingly, in other cases, a bipartisan group of AGs has lined up in opposition to the authority the federal government is asserting here,” he added. “This federal power grab that seeks to limit the ability of states to protect their residents should be rejected.”

Wisconsin’s earlier suits claimed the platforms were effectively offering sports betting products without authorization under state rules.

Expanding Multi-State Legal Battle

Wisconsin is now the fifth state sued by the CFTC in roughly a month over attempts to restrict prediction markets. The agency has already filed similar actions against Arizona, Connecticut, Illinois and New York.

The New York case came shortly after that state sued prediction market operators including Coinbase and Gemini. In Arizona, the dispute became especially prominent after state officials pursued criminal charges against Kalshi. A federal court later issued a temporary restraining order blocking that prosecution for the time being.

The CFTC has also submitted amicus briefs in other courts, including the U.S. Court of Appeals for the Ninth Circuit and the Supreme Judicial Court of Massachusetts.

The aggressive legal strategy follows leadership changes at the commission. After taking office in January, Selig indicated the agency would actively challenge state efforts to regulate platforms that it considers federally supervised exchanges.

Prediction market platforms allow users to trade contracts tied to future outcomes, including elections, economics and sports events. Critics in several states say sports-linked contracts closely resemble traditional wagering products. Supporters argue they are federally regulated financial instruments.

That distinction has become central to ongoing litigation nationwide.

Wisconsin’s involvement comes as the state also prepares for a regulated online sports betting expansion. Earlier this month, Gov. Tony Evers signed legislation permitting statewide wagering through a tribal hub-and-spoke model, subject to amended and ratified gaming compacts under the Indian Gaming Regulatory Act.

For now, the federal-state fight over sports event contracts continues to widen, with courts expected to determine how far state gambling laws can reach when products are already supervised at the federal level.