Beta
    Regulation

    Wisconsin Sues Kalshi, Polymarket, and Three More Prediction Market Platforms

    Wisconsin AG Josh Kaul filed three lawsuits against Kalshi, Polymarket, Coinbase, Robinhood, and Crypto.com on April 23, 2026, alleging illegal sports betting disguised as event contracts. What prediction market users need to know.

    By PredictionMarkets.usMonday, April 27, 20269 min read

    Wisconsin just became the latest state to throw a legal punch at prediction markets — and this one landed on every major platform at once.

    On April 23, 2026, Wisconsin Attorney General Josh Kaul filed three separate lawsuits in Dane County Circuit Court targeting Kalshi, Polymarket, Coinbase, Robinhood, and Crypto.com. The complaints allege these platforms are running illegal sports betting operations in Wisconsin by disguising wagers as financial instruments called "event contracts."

    It's the broadest state action against prediction markets to date by defendant count, and it lands in the middle of an accelerating legal war between state regulators and the federal government over who gets to decide whether these platforms are legal.

    Here's what happened, what it means, and what traders on these platforms should expect.

    The Three Lawsuits, Broken Down

    Wisconsin structured its attack across three parallel complaints — each targeting a different prediction market ecosystem.

    Complaint 1: Kalshi, Robinhood, and Coinbase

    The first complaint names Kalshi Inc. and four affiliated entities, Robinhood Markets and two affiliates, and two Coinbase entities. The rationale for grouping them together: Robinhood and Coinbase both route prediction market orders through Kalshi's exchange. Under Wisconsin's theory, all three are jointly facilitating the same underlying activity.

    Complaint 2: Polymarket

    The second complaint targets Polymarket and affiliated entities. For US-based prediction market users, it's worth noting that Polymarket's US operations are run through QCX LLC d/b/a Polymarket US — a CFTC-registered exchange that currently offers sports-only event contracts to US users. The Wisconsin complaint focuses specifically on sports contracts, making this the relevant Polymarket entity for purposes of the suit.

    Complaint 3: Crypto.com

    The third complaint names Foris Dax Markets and North American Derivatives Exchange Inc. — the Crypto.com entities operating under the CDNA infrastructure. Crypto.com's prediction market arm offers sports event contracts including moneyline, spread, and totals markets on professional and college sports.

    All three complaints were filed in Dane County as "complaint[s] to abate public nuisance" and seek the same core relief: a declaration that sports-related event contracts violate Wisconsin gambling law, plus preliminary and permanent injunctions stopping the platforms from offering such contracts to Wisconsin customers.

    Critically, Wisconsin is not seeking monetary damages — at least not at this stage. Kaul said Thursday that possibility "hasn't been ruled out should there be a legal basis to demand them and the facts to support such a demand," but the initial suits are focused on stopping the activity, not clawing back revenue.

    What Wisconsin Claims

    The legal theory is straightforward: a bet is a bet, regardless of what you call it.

    Wisconsin's complaints allege that sports-related event contracts on these platforms meet the statutory definition of a "bet" under Wisconsin law (Wis. Stat. § 945.03(1m)), making them illegal commercial gambling. The platforms collect transaction fees on every contract traded — a structure the complaints compare to "the operator of an illicit poker game who takes a cut of each pot."

    AG Kaul made the state's position explicit at a Thursday press conference:

    "Sports betting and other forms of commercial gambling have long been illegal in the state of Wisconsin. No company is above this law no matter how creatively those companies try to disguise the activity they're engaged in."

    "Our position in this case is that event contracts are no different than ordinary sports bets. The companies collect a fee, we allege, for every bet that's made, leading them to earn significant revenue from Wisconsinites through violations of our state's gambling regulations."

    Wisconsin cited the platforms' own marketing as evidence. Kalshi's Instagram ads, according to the complaints, described it as "The First Nationwide Legal Sports Betting Platform." Polymarket's own materials called it "a platform where people can bet on the outcome of future events." The state's argument: the companies themselves acknowledge what they're selling.

    The complaints also include a specific financial allegation about Kalshi: that the company generates more than $1 billion annually from sports event contracts, representing approximately 90% of its total estimated revenue. This is an unverified allegation in a legal filing — Kalshi has not confirmed these revenue figures, and they have not been independently verified from a primary source. The complaint uses this figure to argue that sports contracts are not a peripheral feature but the commercial core of Kalshi's business.

    One example cited across multiple filings: on April 3, 2026, traders on these platforms could buy contracts reflecting a roughly 54% chance that the University of Michigan would win its Final Four matchup against Arizona. Winners received $1 per contract; losers received nothing. Wisconsin argues this transaction is "indistinguishable from an ordinary sports bet" under state law.

    How the Platforms Are Responding

    The platforms are fighting back on federal preemption grounds — the argument that CFTC oversight of their contracts supersedes state gambling laws.

    Kalshi spokeswoman Elisabeth Diana said in a statement: "As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction. It's very different from what state-regulated sportsbooks and casinos offer their customers. We are confident in our legal arguments."

    Robinhood's spokesperson issued this statement: "As we've previously shared, Robinhood's event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner. We intend to defend ourselves against these claims."

    Coinbase Chief Legal Officer Paul Grewal was the most direct, invoking the recent Third Circuit ruling: "Congress was clear — consumers deserve uniform, federal oversight over derivatives markets. As the Third Circuit held, state enforcement that seeks to prohibit prediction markets — like Wisconsin's lawsuit today against Coinbase and others — 'is exactly the patchwork that Congress replaced wholecloth by creating the CFTC.' Wisconsin should accept clear and consistent CFTC oversight of prediction markets — just as Congress intended."

    Polymarket and Crypto.com did not respond to press inquiries.

    The preemption argument the platforms are making isn't new — and it just got a significant boost. Earlier this month, the Third Circuit Court of Appeals ruled in Kalshi's favor in a New Jersey case, holding that CFTC-registered prediction market contracts are not subject to state gambling enforcement. That ruling is part of a broader legal arc we covered in our Third Circuit analysis.

    The Wisconsin Context: Tribal Gaming and Recent Legislation

    There's an important backdrop to this lawsuit: Wisconsin only recently moved to legalize online sports betting — but with a specific restriction designed to protect tribal gaming interests.

    Earlier in April, Governor Tony Evers signed a bill legalizing online sports betting in Wisconsin, but only under a "hub and spoke" model where the betting server must be physically located on tribal land. The legislation followed pressure from Wisconsin's 11 federally recognized tribes, who hold exclusive rights to conduct certain gambling operations under state gaming compacts. Under the new law, tribes can renegotiate their compacts to offer mobile betting — but national platforms like DraftKings and FanDuel pushed back, arguing the 60% tribal gaming revenue split mandated by federal law makes Wisconsin uneconomical.

    AG Kaul was explicit that the new law has no bearing on the prediction market lawsuits: "What we are alleging is violations of Wisconsin law, and the allegations would be the same whether or not there had been the new legislation passed."

    Still, the timing matters. The tribal nations are watching. The Oneida Nation explicitly supported Kaul's action: "The Oneida Nation stands firmly in our support of the fair enforcement of Wisconsin laws and respect for tribal sovereignty," said Tehassi Hill, chairman of the Oneida Nation.

    Wisconsin's lawsuit also arrives alongside an existing tribal case. The Ho-Chunk Nation filed suit against Kalshi and Robinhood in August 2025, alleging violations of state, federal, and tribal law by allowing Wisconsin residents to bet on sports outcomes. That case is ongoing with a trial set for May 2027.

    The Bigger Legal Picture

    Wisconsin is the latest entry in a rapidly expanding map of state enforcement actions against prediction market platforms. In the past 30 days alone:

    • April 2, 2026: The CFTC sued Arizona, Connecticut, and Illinois in federal court, asserting its exclusive jurisdiction over event contracts and seeking to block state enforcement actions.
    • April 8, 2026: The Third Circuit ruled in Kalshi's favor in New Jersey, a major win for the federal preemption argument.
    • April 21, 2026: New York AG Letitia James sued Coinbase and Gemini, alleging $2.2 billion and $1.2 billion in illegal gambling revenue respectively.
    • April 23, 2026: Wisconsin filed these three complaints.
    • April 24, 2026: The CFTC added New York to its preemption lawsuit campaign, countering James's action the same day she announced it.

    The pattern is clear: states are suing platforms, and the CFTC is suing states back. The dispute over whether prediction market event contracts are "swaps" under federal commodity law or "bets" under state gambling law is now live in multiple federal circuits simultaneously.

    CFTC Chairman Michael S. Selig has been unambiguous: "CFTC-registered exchanges have faced an onslaught of state lawsuits seeking to limit Americans' access to event contracts and undermine the CFTC's sole regulatory jurisdiction over prediction markets."

    The constitutional question at the core of all these cases — whether the Commodity Exchange Act preempts state gambling enforcement of federally regulated event contracts — is widely expected to reach the Supreme Court. The Third Circuit ruling (favoring preemption) and the eventual Ninth Circuit ruling (which heard oral arguments April 16) may create a circuit split, the traditional trigger for Supreme Court review.

    For a deeper dive into how this legal battle escalated, see our full coverage of the CFTC's preemption lawsuits against Arizona, Connecticut, and Illinois, the Third Circuit ruling, and the symmetric Friday filing of CFTC v. New York alongside 38 AGs' amicus brief.

    What This Means for Traders in Wisconsin

    If you're currently using Kalshi, Polymarket US, Coinbase, Robinhood, or Crypto.com for prediction market trading in Wisconsin, here's the practical reality:

    No immediate change. Wisconsin filed for injunctions, not emergency TROs (temporary restraining orders). The platforms are not blocked from operating in Wisconsin today. The litigation process will take months, possibly years — a trial in the Ho-Chunk case isn't scheduled until May 2027.

    Sports contracts are the specific target. Wisconsin's complaints focus exclusively on sports-related event contracts. Markets on elections, economics, finance, and other non-sports events are not named in the complaints. Kaul's office was explicit that the suit targets sports gambling, not prediction markets broadly.

    Federal preemption arguments are strong — and getting stronger. The Third Circuit ruling is the best indicator of where this goes: a federal court of appeals has already held that CFTC oversight preempts state gambling enforcement. Wisconsin must fight that precedent in its own courts.

    Watch for CFTC intervention. If Wisconsin's lawsuits gain momentum, the CFTC may add Wisconsin to its growing list of preemption suits — the same move it made in response to Arizona, Illinois, Connecticut, and New York. That countersuit would slow any state injunction significantly.

    If you're concerned about your specific positions, check the platforms' own guidance. Kalshi's help center and platform status page are the most reliable places to track any service changes for Wisconsin users.

    FAQ

    Is prediction market trading now illegal in Wisconsin?

    Not yet. Wisconsin has filed lawsuits seeking to make sports-related event contracts illegal, but courts have not issued any injunction. Platforms are still operating normally in Wisconsin while litigation proceeds.

    Which platforms were sued?

    Kalshi, Robinhood, and Coinbase (together in one complaint), Polymarket (separate complaint), and Crypto.com (separate complaint). The lawsuits target their sports-related prediction market offerings specifically.

    Why didn't Wisconsin sue Interactive Brokers (ForecastEx) or PredictIt?

    The three complaints focus on the largest platforms by user exposure in Wisconsin. ForecastEx (operated by Interactive Brokers as a CFTC-licensed exchange) and PredictIt were not named. PredictIt received full CFTC designation as a federally licensed exchange in September 2025.

    Does the Third Circuit ruling protect these platforms?

    The Third Circuit ruled in favor of Kalshi in a New Jersey case, which is persuasive authority for other federal courts but not binding on Wisconsin state courts. The platforms will argue that ruling applies here; Wisconsin will argue its state gambling laws control.

    What about non-sports markets on these platforms?

    Wisconsin's complaints specifically target sports-related event contracts. Markets on elections, the economy, Fed decisions, and similar non-sports topics are not part of these lawsuits.

    Sources & Verification

    Back to Articles

    Related Articles

    Regulation

    CFTC Proposes Formal Rules for Prediction Markets: What Gets Banned, What Survives

    The CFTC published a Notice of Proposed Rulemaking today establishing a framework for which event contracts can trade—and which face prohibition. Here is what traders need to know.

    8 minJun 10, 2026
    Regulation

    STOP Corrupt Bets Act: The Federal Bill That Would Ban Sports, Election, and War Contracts on Kalshi and Polymarket

    Senator Merkley and Rep. Raskin's STOP Corrupt Bets Act (S. 4226) would ban prediction market contracts on sports, elections, war, and government actions — colliding directly with the Trump administration's CFTC.

    11 minJun 2, 2026
    Regulation

    Rhode Island Sues Kalshi and Polymarket: The State Revenue Argument Against Prediction Markets

    Rhode Island filed dueling lawsuits against Kalshi and Polymarket on May 21, 2026, claiming sports event contracts are illegal gambling that has already cut state lottery revenue 8%. Inside the legal battle and what it means for users.

    8 minMay 26, 2026