Wisconsin Labels Prediction Markets as Illegal Gambling

(AsiaGameHub) –   Prediction market platforms are no strangers to legal hurdles, and the recent litigation from the Wisconsin Department of Justice continues this trend. The state is taking aim at these platforms, contending they have aided and abetted “illegal sports gambling.”

Wisconsin Becomes the Latest State to Call Prediction Markets Illegal Gambling

The core of Wisconsin’s case is straightforward: it asserts that trading contracts on sports outcomes must comply with state gambling regulations. However, platforms like Kalshi and Polymarket cite the authority of federal law, overseen by the Commodity Futures Trading Commission (CFTC).

This fundamental disagreement has sparked a fierce legal battle, with states initiating lawsuits and prediction markets retaliating. Wisconsin’s latest suit identifies all major prediction market operators in the state, such as Crypto.com, Polymarket, Coinbase, Robinhood, and Kalshi.

The state claims these firms are providing conventional gambling services by offering sports event contracts. Wisconsin Attorney General Josh Kaul stated:

“These companies have chosen to flout Wisconsin law by thinly disguising the sports betting that they facilitate through what are called event contracts. But our position in this case is that event contracts are no different than ordinary sports bets.”

Lawmakers Are Split on What the Best Course of Action Is

Concurrently, a U.S. senator is pursuing legislation to formally classify prediction markets as gambling—a difficult task even amid broad sector criticism.

While most legislators acknowledge the necessity for a functional framework to resolve the debate over the legality of sports event contracts, many in this group refrain from using harshly condemnatory language against the industry.

Meanwhile, other states have followed a comparable path, voicing serious worries about the spread of prediction markets and what they see as an eroding distinction between investment and gambling.

In Massachusetts, officials have highlighted concerns about underage users on prediction markets, noting that individuals under 21 can access these platforms despite being “too young to gamble.”

New York’s attorney general has recently targeted two prediction market platforms, namely Coinbase Financial Markets and Gemini Titan. In response, the prediction market industry has fought back. Kalshi has filed lawsuits nationwide, sometimes acting preemptively.

The CFTC has also taken an aggressive stance, filing its own counter lawsuits against multiple states, arguing they are attempting to interfere with federal regulatory authority.