Wisconsin has filed lawsuits against Kalshi, Coinbase, Polymarket, Robinhood and Crypto.com, arguing the companies operate unlicensed gambling venues rather than regulated financial platforms. The supporting evidence appears in the filing.
Attorney General Josh Kaul announced the complaints on Thursday, declaring: “Thinly disguising unlawful conduct doesn’t make it lawful.”
The filings, lodged in Dane County, deepen an already fractious national debate over whether prediction markets belong under federal commodity law or state gambling regulations. The outcome could reshape a fast-growing sector and force a Supreme Court ruling on where regulatory authority actually sits.
Three Complaints, One Legal Theory
Wisconsin structured its offensive across three parallel cases. One complaint targets Crypto.com and its derivatives arm.
A second names Polymarket and affiliated entities. The third pulls in Kalshi alongside distribution partners Robinhood and Coinbase, both of which route prediction market orders directly to Kalshi’s infrastructure.
Across all three filings, the state’s legal argument is consistent: so-called “event contracts” are wagers because users pay money to take a position on a real-world outcome and collect a fixed payout if they are correct.
Prosecutors point to NCAA tournament markets as a concrete example, where contracts tied to specific game results traded at implied probabilities and paid out exactly one dollar on a win or nothing on a loss.
The state did not rely solely on its own characterization. Wisconsin prosecutors cited the companies’ own promotional language as evidence, including a Kalshi Instagram advertisement that described the platform as “The First Nationwide Legal Sports Betting Platform” and Polymarket’s own copy calling itself “a platform where people can bet on the outcome of future events.”
Federal Versus State Authority on the Line
The central legal question is whether prediction market contracts qualify as financial instruments regulated exclusively by the Commodity Futures Trading Commission or whether they fall under state gambling statutes the moment they involve sports outcomes and fixed-odds structures.
That distinction determines whether companies operate under one unified federal rulebook or face a patchwork of 50 separate gaming regulators.
Prediction market platforms have consistently maintained that their products are financial instruments, not bets, a position backed by CFTC oversight arguments they have pressed in federal venues.
Wisconsin is rejecting that framing entirely, treating the fee structures, sports-linked contracts and the companies’ own marketing as sufficient grounds to classify the activity as gambling under state law.
Wisconsin is not the first state to push back. Several other jurisdictions have raised similar concerns, and legal analysts widely expect the conflict between state gambling authority and federal commodity regulation to eventually require Supreme Court resolution.
No federal appellate court has yet issued a definitive ruling on which framework controls.
For Coinbase and Robinhood, the complaints add a fresh legal layer to platforms that primarily position themselves as mainstream financial services.
Both firms act as distribution channels for Kalshi’s contracts rather than operating independent prediction market infrastructure, yet Wisconsin named them as defendants on the grounds that facilitating access to the markets is itself sufficient for liability under state gambling law.
Crypto.com’s inclusion signals that the state’s scrutiny extends beyond U.S.-headquartered platforms. The company’s derivatives arm offers event contract products that Wisconsin argues mirror the same fixed-odds wager structure found across the other named defendants.
Not Financial Advice: This article is for informational purposes only. Cryptocurrency investments carry significant risk. Always conduct your own research before investing.
