The Wisconsin state moved to challenge major prediction markets and crypto platforms through lawsuits announced on April 23, 2026. Authorities allege these firms offer event-based contracts that function like sports betting and operate outside approved gambling frameworks.
The Wisconsin Department of Justice (DOJ) named Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com in its filings. Authorities claim these companies operate unlicensed gambling hubs under state law.
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Prediction Markets Face Betting Claims
Lawsuits filed in Dane County claim that the prediction markets provided by these businesses are like other forms of betting. Trades are placed on events like sports outcomes, with payments based on real-world outcomes.
Attorney General Josh Kaul said the structure does not change the nature of the activity. He said that masking illegal activity does not give it the cover of state gambling laws.
The state also said that the lawsuits do not relate to tribal sports betting. Mobile sports betting is legal on tribal lands in Wisconsin, but the companies listed in the filings do not operate in the state’s approved areas.
The state also took issue with the business model of these companies. The filings say companies impose contract transaction fees, which the state likens to casino-style commissions on gambling.
The complaint cites figures showing Kalshi makes more than $1 billion per year from sports contracts. Authorities contend that receiving revenue from such activity falls under the definition of illegal gambling in Wisconsin law.
Legal Clash Over Prediction Markets
The Department of Justice is requesting that the court declare the platforms to be operating in violation of gambling laws. It also seeks to declare their activities as a public nuisance and bar access to sports contracts for Wisconsin residents.
The suits follow a nationwide debate about prediction market regulation. Some states have interpreted the law differently from others, leaving a patchwork of state regulations in the US.
The industry has reacted to the suits. Paul Grewal noted that Congress intended for derivatives markets to be subject to consistent federal regulation and that disparate state enforcement actions would be disruptive.
Firms like Kalshi claim their products are regulated by the Commodity Futures Trading Commission. They claim that the contracts are financial instruments, not betting.
State authorities still maintain that the contracts are gambling. In April, the CFTC also brought a suit against Illinois, claiming federal law pre-empts state enforcement.
The case may be appealed to the state’s higher courts. It could be resolved by the U.S. Supreme Court, which could rule whether prediction markets are financial derivatives or regulated gambling.
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