A US federal judge has refused a request from the Commodity Futures Trading Commission (CFTC) to stop Wisconsin enforcing its gambling laws against several high-profile prediction market and trading platforms.
Judge William Griesbach, sitting in the U.S. District Court for the Eastern District of Wisconsin, ruled that the CFTC had not met the legal threshold required for a preliminary injunction aimed at blocking state enforcement actions.
The decision represents a setback for the CFTC’s efforts to assert exclusive federal authority over contracts linked to sporting events, and leaves platforms such as Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase exposed to Wisconsin’s ongoing lawsuits.
Federal injunction request fails
The CFTC brought the federal case in April after Wisconsin sued the five companies, alleging that sports event contracts offered on their platforms amount to unlicensed sports betting under state law.
In his ruling, Griesbach found the regulator had failed to demonstrate a likelihood of success on the merits of its case, a risk of irreparable harm, or that the balance of equities favoured the extraordinary step of issuing an injunction.
The court also declined requests from Kalshi and Crypto.com to intervene in the federal action and seek their own preliminary relief alongside the CFTC.
Dispute over ‘swaps’ and federal pre-emption
Central to the CFTC’s argument was its claim that sports event contracts offered on these platforms qualify as “swaps” under the Commodity Exchange Act and therefore fall within its exclusive federal jurisdiction.
Griesbach rejected that position, concluding that the agency had not shown that the sports-related contracts in question meet the statutory definition of swaps. The judge said that finding alone was sufficient to deny the requested injunction.
The court further dismissed the CFTC’s contention that the Commodity Exchange Act bars Wisconsin from applying its gambling laws to platforms regulated by the federal agency.
The ruling indicates that federal registration with the CFTC does not, on its own, insulate prediction market or trading platforms from state-level gambling enforcement when their products are tied to sporting outcomes.
Wisconsin targets ‘sports bets presented as financial products’
Wisconsin Attorney General Josh Kaul has characterised the contracts at issue as sports wagers being marketed as investment products.
“Thinly disguising unlawful conduct doesn’t make it lawful,” Kaul said in April, when the state filed its lawsuits against Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase. “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”
Legal analyst Daniel Wallach has suggested that, because the federal law does not completely pre-empt state regulation, the five state cases are now likely to proceed in Wisconsin courts. State judges could then be asked to issue injunctions preventing the platforms from offering sports event contracts to users in Wisconsin.
National battle over prediction market oversight
The Wisconsin decision comes against the backdrop of a broader contest over who controls prediction markets and sports-related derivatives in the United States.
Attorneys general from 44 states have urged the CFTC to withdraw and rewrite proposed amendments to Rule 40.11, which would reshape the agency’s approach to event contracts. In a joint letter, they argued that the draft framework exceeds the CFTC’s powers under the Commodity Exchange Act and encroaches on gambling regulation traditionally handled by states.
Ohio Attorney General Andy Wilson led the coalition, which submitted its objections as the public comment period closed. The states argued that Congress has not clearly given the CFTC authority to take over regulation of sports betting markets.
“States have long regulated gamblingincluding sports bets. The federal government has not,” the letter stated, according to a filing reported by crypto.news.
Patchwork rules for US users
The outcome has practical consequences for US users of prediction market and trading platforms, whose access increasingly depends on where they live. If state gambling laws operate alongside federal commodities regulation, firms such as Kalshi and Polymarket may face a patchwork of licensing obligations and restrictions across different jurisdictions.
Wisconsin’s stance contrasts with a ruling earlier this week in Minnesota, where U.S. District Judge Katherine Menendez temporarily blocked a new state ban on prediction markets.
Menendez found that the CFTC, Kalshi and Polymarket were likely to succeed with their argument that federal law pre-empts Minnesota’s restrictions. Her injunction allows the platforms to continue operating in Minnesota while the case proceeds, according to the Associated Press.
The split outcomes leave the sector without a clear nationwide standard. Courts in Wisconsin and New York have leaned towards preserving state authority, while Minnesota’s ruling supports the CFTC’s view that some event contracts fall under exclusive federal oversight.
A CFTC spokesperson said the agency was disappointed by the Wisconsin decision and would appeal. The next phase of litigation will determine whether Wisconsin’s lawsuits move forward in state court and whether the platforms involved must halt their sports event contracts in the state.
