Wisconsin Sports Prediction Market Lawsuit: Court Rules Against CFTC and Kalshi

In a regulatory battle over the U.S. sports prediction market, a federal district court in Wisconsin has dismissed the CFTC's (Commodity Futures Trading Commission) request for a temporary restraining order, rejecting the claims of the CFTC and major prediction platforms to block the enforcement of state gambling laws.

The CFTC suffered a major defeat in Wisconsin. The federal court ruled that the request for a temporary restraining order was denied and determined that sports event contracts are not "swaps." Furthermore, even if the definition were met, the likelihood of the CFTC winning on the argument that the Commodity Exchange Act (CEA) takes precedence over state law was deemed low.

On July 29, 2026, Federal District Judge William Griesbach issued a ruling rejecting the CFTC's request for an emergency temporary restraining order against Wisconsin.

This case originated from Wisconsin suing five companies—Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase—in April for offering sports-related prediction contracts without obtaining the necessary licenses, violating state gambling laws (Chapter 945).

In response, the CFTC had filed a lawsuit claiming "exclusive jurisdiction" over the derivatives market under federal regulation to stop the state's actions. However, the court ruled that registration with the CFTC does not immediately provide protection from state gambling laws. Additionally, the court dismissed the intervention requests from Kalshi and Crypto.com, which sought to participate in the lawsuit.

No Recognition of "State Law Priority" Under the Commodity Exchange Act

The focal point of this ruling was the principle of priority, whether federal law (the Commodity Exchange Act) takes precedence over state gambling regulations.

Judge Griesbach pointed out that federal law does not automatically invalidate Wisconsin's commercial gambling regulations. He suggested that the wording of the state's gambling laws could also apply to sports-related event contracts under federal regulation. Furthermore, it was noted that the CFTC had not sufficiently demonstrated "irreparable harm" as a basis for stopping the state's enforcement.

While the platforms claim their contracts are "financial products," state authorities consider them "de facto sports gambling," leading to a significant discrepancy in interpretations. This ruling aligns with a similar case in New York where such claims were dismissed.

Future Outlook and Impact on the Industry

According to legal expert Daniel Wallach, since complete federal priority was not recognized, the case is expected to be remanded to state court.

He analyzes that the state court may issue a temporary restraining order prohibiting the platforms from offering sports contracts within the state. The defeated CFTC and Kalshi are expected to appeal to the Seventh Circuit Court of Appeals.

On the other hand, there have been cases in other regional appellate courts that have recognized federal law priority, indicating a growing divide in judgments. Attention is focused on which authority—federal or state—will lead the rapidly expanding U.S. prediction market as future courtroom battles unfold.