The Wisconsin Department of Justice filed a series of lawsuits on Thursday targeting five major financial and prediction market platforms, alleging that their "event contracts" constitute illegal, unlicensed gambling. The legal action, filed in Dane County, names Kalshi, Polymarket, Coinbase, Robinhood, and Crypto.com as defendants.
Wisconsin Attorney General Josh Kaul stated that the platforms are attempting to disguise betting as financial innovation. "Thinly disguising unlawful conduct doesn't make it lawful," Kaul said in a press statement announcing the filings. The state’s legal theory rests on the argument that these platforms function as casinos rather than financial exchanges, pointing specifically to fee structures and marketing materials that frame the products as wagers on real-world events.
A Collision of Federal and State Authority
The lawsuits categorize the platforms into three distinct groups: one targeting Crypto.com and its derivatives arm; one aimed at Polymarket; and a third involving Kalshi alongside its distribution partners, Robinhood and Coinbase. According to the state's filings, these companies facilitate betting for Wisconsin residents by allowing users to pay money to take positions on outcomes, such as NCAA tournament games, with fixed payouts.
CoinDesk reported that the core of the dispute hinges on whether these "event contracts" fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) as financial instruments or under state control as gambling. The outcome of this litigation could eventually reach the Supreme Court, establishing a precedent for whether prediction markets operate under a single federal rulebook or remain subject to the individual gaming regulations of all 50 states.
Prosecutors cited specific examples of the platforms' own marketing to bolster their claims. The complaints highlight Instagram advertisements from Kalshi that branded the service as "The First Nationwide Legal Sports Betting Platform," and note that Polymarket has explicitly referred to itself as a place where users can "bet on the outcome of future events." The state argues that these structures meet the statutory definition of a bet under Wisconsin law, regardless of the terminology used by the companies to describe their products. The state is currently seeking preliminary and permanent injunctions to bar all five entities from offering these sports-related contracts to residents within its borders.
