Wisconsin has escalated its challenge against prediction market platforms, widening a legal fight already taking shape across several U.S. states over how these products should be classified.
Summary
- Wisconsin filed complaints against Crypto.com, Polymarket, and Kalshi, along with Robinhood and Coinbase, alleging their prediction markets function as unlicensed gambling platforms.
- State prosecutors argue that event contracts tied to outcomes such as NCAA tournament games meet the legal definition of a bet, with fixed payouts for correct predictions.
Fresh complaints filed in Dane County name Crypto.com and its derivatives arm, Polymarket, and Kalshi, alongside distribution partners Robinhood and Coinbase. Prosecutors argue the platforms enable event-based wagering for residents, including contracts tied to sports outcomes.
At the core of the filings sits a simple claim. Users pay to take positions on real-world events and receive fixed payouts if correct.
Wisconsin says that the structure fits its legal definition of a bet. Contracts linked to NCAA tournament games are cited as one example, where positions trade at probability-based prices and settle at $1 or $0 depending on the result.
Marketing language has been pulled into the case as supporting evidence. Kalshi’s promotional material described it as “The First Nationwide Legal Sports Betting Platform,” while Polymarket has referred to itself as a place where users can bet on future events.
Attorney General Josh Kaul addressed that framing directly, stating, “Thinly disguising unlawful conduct doesn’t make it lawful.”
Meanwhile, these platforms collect transaction fees on each contract, a structure prosecutors compare to a casino taking a cut from wagers placed on its floor.
Federal and state fight over control deepens
Wisconsin’s move follows a similar path taken earlier by New York. As previously reported by crypto.news, New York Attorney General Letitia James filed lawsuits against Coinbase Financial Markets and Gemini Titan, accusing both of operating unlicensed prediction markets.
Her office argued that event-based contracts tied to sports and elections were offered without approval from the New York State Gaming Commission and were accessible to users below the legal betting age of 21.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James added.
Court filings in that case sought at least $2.2B from Coinbase and $1.2B from Gemini, increasing financial pressure alongside regulatory scrutiny.
Industry participants continue to push back by pointing to federal oversight. Coinbase has argued that such disputes belong in federal court.
Platforms operating through Kalshi maintain that event contracts qualify as swaps under the jurisdiction of the Commodity Futures Trading Commission, not state gambling regulators.
A recent ruling from the United States Court of Appeals for the Third Circuit sided with Kalshi, treating the regulator’s decision not to block the contracts as effectively settling the question of jurisdiction.
Even so, states continue to press their own interpretations. Authorities in Nevada have described similar contracts as indistinguishable from gambling, while New York has maintained that each contract represents a bet.
With multiple states building cases on similar grounds, the dispute is moving toward a broader constitutional question. A final determination from the Supreme Court of the United States could decide whether prediction markets fall under a single federal framework or remain subject to state gambling laws.
