In a legal move, Wisconsin Attorney General Josh Kaul has initiated lawsuits against Kalshi, Polymarket, Robinhood, Crypto.com, and Coinbase in Dane County court. The state alleges that these firms’ prediction market offerings amount to unlawful gambling operations targeting residents of Wisconsin.
The lawsuit seeks declarations affirming that providing sports-related event contracts to customers in Wisconsin violates Wis. Stat. § 945.03(1m) and represents a public nuisance, as per the court documents.
In his statement, Attorney General Kaul emphasized that these platforms are accused of enabling illegal sports betting operations within the state. Evidence cited includes marketing materials from the firms themselves. For instance, Kalshi’s Instagram ads promote it as “The First Nationwide Legal Sports Betting Platform,” while Polymarket describes its markets as a place for betting on future events.
According to Wisconsin’s filings, Kalshi reportedly generates over $1 billion annually from sports contracts, comprising about 90% of its total revenue.
This legal action parallels a lawsuit filed by New York Attorney General Letitia James against Coinbase and Gemini concerning similar market offerings. James has criticized these prediction markets as illegal gambling platforms that put young individuals at risk due to insufficient protective measures.
The lawsuits highlight escalating regulatory pressures on prediction markets from various jurisdictions, amidst ongoing disputes over regulatory authority. Both the Department of Justice and the Commodity Futures Trading Commission (CFTC) have pursued legal action against states such as Connecticut, Arizona, and Illinois for attempting to oversee platforms like Kalshi and Polymarket.
CFTC Chairman Michael Selig argues that federal oversight is essential to prevent a fragmented regulatory landscape. He warns that unclear regulations could push operators offshore or lead to financial crises akin to FTX’s collapse.
Wisconsin’s legal challenge adds complexity to the national regulatory environment for prediction markets, coinciding with bipartisan legislative efforts in Congress to potentially outlaw sports prediction markets altogether. Meanwhile, New York and Illinois have restricted their government employees from using these platforms due to insider trading concerns. Additionally, a U.S. Army soldier has been charged with utilizing classified information for trades on Polymarket related to the January operation targeting Venezuelan President Nicolás Maduro.