CFTC sues Wisconsin in agency's legal campaign defending prediction markets authority

Wisconsin has joined the growing number of U.S. states being sued by the Commodity Futures Trading Commission as that agency insists on its jurisdiction over prediction markets trading at firms such as Kalshi and Crypto.com.

Several states have gone after those businesses, accusing them of violating state gaming laws via the betting taking place on the growing platforms, but CFTC Chairman Mike Selig has led a legal pushback against states including New York, Arizona, Illinois and Connecticut. He's argued that the derivatives regulator, which he leads as the sole member of what's meant to be a five-member commission, has "exclusive jurisdiction" over the trading of event contracts that he argues are an emerging form of the same kinds of derivatives activity long handled by the CFTC.

Last week, Wisconsin sued Kalshi, Coinbase, Polymarket, Robinhood and Crypto.com for running unlicensed gambling operations in the state — echoing the claims made against the industry elsewhere.

Selig has now responded in the U.S. District Court for the Eastern District of Wisconsin, said he's trying to send a message: "If you interfere with the operation of federal law in regulating financial markets, we will sue you."

Also last week, New York sued Coinbase and Gemini over their prediction markets businesses, and days later, the CFTC responded with its own lawsuit against the state.

Arizona has been pursuing a criminal case against Kalshi, but a court there paused the prosecution earlier this month, with the judge arguing that the federal agency is likely to be successful making its case that the U.S. law will preempt state gambling laws.

Read More: U.S. CFTC adds New York to string of states its suing to stop prediction market pushback