Wisconsin authorities have filed lawsuits against several major platforms and their affiliates, alleging unlawful sports betting activities in the state. Read on for the latest updates and industry implications.
Key Takeaways
- Wisconsin is pursuing legal action against Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates for alleged illegal gambling.
- The state claims these companies are disguising sports betting as event contracts, which is not permitted under Wisconsin law.
- Defendants argue their offerings are federally regulated, highlighting a conflict between state and federal oversight of prediction markets.
Wisconsin Targets Online Platforms Over Alleged Illegal Sports Betting
State Files Lawsuits Against Major Platforms
The Wisconsin Department of Justice announced on Thursday that it has initiated legal proceedings against Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates. The state alleges these companies are facilitating sports betting in violation of Wisconsin law. According to a press release from the Attorney General’s office, the platforms are accused of presenting sports betting as event contracts, a practice the state considers unlawful.
Attorney General Josh Kaul stated, “Thinly disguising unlawful conduct doesn’t make it lawful. These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.” Wisconsin law prohibits sports betting and most forms of commercial gambling, with only limited exceptions.
Details of the Legal Claims
The lawsuits allege that the defendants are circumventing state gambling laws by labeling sports betting as event contracts. The state claims these platforms collect fees on the bets they facilitate, which constitutes illegal gambling activity under Wisconsin statutes. The legal actions seek a court declaration that these companies have violated state law by creating a public nuisance. Wisconsin is also seeking both preliminary and permanent injunctions to prevent the companies from offering sports-related event contracts to users in the state.
Responses From the Accused Companies
Kalshi responded to PYMNTS via email, emphasizing that it operates as a regulated, nationwide exchange for real-world events and falls under exclusive federal jurisdiction. The company stated, “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.”
A Robinhood spokesperson told PYMNTS, “As we’ve previously shared, Robinhood’s event contracts are federally regulated by the CFTC [Commodity Futures Trading Commission] 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 commented on LinkedIn, noting that Congress intended for federal oversight of derivatives markets and that state-level actions against prediction markets create a regulatory patchwork. Grewal stated, “Wisconsin should accept clear and consistent CFTC oversight of prediction markets — just as Congress intended.”
Polymarket and Crypto.com did not provide comments to PYMNTS by the time of publication.
Broader Regulatory Context
The lawsuits in Wisconsin come as the Commodity Futures Trading Commission (CFTC) recently filed lawsuits against Arizona, Connecticut, and Illinois, arguing that state actions in this area interfere with the regulator’s exclusive jurisdiction over prediction markets. This ongoing tension between state and federal oversight is of particular interest to the gambling industry, including casino affiliates and online betting operators, as it may shape the regulatory landscape for prediction markets and related gambling activities.
For casino affiliates and gambling industry stakeholders, these legal developments highlight the importance of understanding both state and federal regulations when promoting or facilitating online betting and prediction market products.
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