Wisconsin sues Kalshi, Coinbase, Polymarket, calls prediction markets illegal betting
Wisconsin has stepped up its challenge against prediction market platforms, expanding a legal battle that already exists in several US states over how these products should be positioned.
Summary
- Wisconsin has filed complaints against Crypto.com, Polymarket, and Kalshi, as well as Robinhood and Coinbase, claiming their prediction markets operate like unlicensed gambling platforms.
- Federal prosecutors argue that event contracts tied to outcomes such as NCAA championship games meet the legal definition of betting, with fixed payouts for fair predictions.
The new complaints filed on behalf of Dane County Crypto.com and its derivatives arm, Polymarket, and Kalshi, alongside distribution partners Robinhood and Coinbase. Prosecutors argued that the stadiums allowed event-based betting to residents, including contracts tied to sports outcomes.
At the heart of the filing sits a simple claim. Users pay to take positions in real-world events and receive fixed payouts if they are correct.
Wisconsin says the facility fits its legal definition of betting. Contracts tied to NCAA tournament games are cited as one example, where positions trade at prices based on odds and settle at $1 or $0 depending on the outcome.
Marketing language has been cited in the lawsuit as supporting evidence. Kalshi’s promotional materials described it as “The World’s First Official Sports Betting Platform,” while Polymarket billed itself as a place where users could bet on future events.
Attorney General Josh Kaul addressed this issue directly, saying, “Slightly covering up illegal behavior does not make it illegal.”
Meanwhile, these platforms collect transaction fees from each contract, a structure prosecutors liken to a casino taking a cut of wagers placed on the floor.
The state-to-state struggle for control deepens
Wisconsin’s move follows the same path New York took earlier. As previously reported by crypto.news, New York Attorney General Letitia James filed lawsuits against Coinbase Financial Markets and Gemini Titan, accusing both of operating unlicensed prediction markets.
His office argued that event-based contracts related to sports and elections were offered without the approval of the New York State Gaming Commission and were accessible to users under the legal betting age of 21.
“Gambling by any other name is still gambling, and it is exempt from regulation under our state laws and Constitution,” added James.
Court filings in that case demanded at least $2.2B from Coinbase and $1.2B from Gemini, increasing financial pressure in line with regulatory scrutiny.
Industry stakeholders continue to push back by pointing to corporate oversight. Coinbase has argued that such disputes belong in federal court.
Kalshi platforms maintain that event contracts qualify as exchanges under the jurisdiction of the Commodity Futures Trading Commission, not state gambling regulators.
A recent decision from the United States Court of Appeals for the Third Circuit sided with Kalshi, treating the administrator’s decision not to block the contracts as effectively resolving the administrative question.
However, states continue to press their own interpretations. Authorities in Nevada have defined similar contracts as inseparable from gambling, while New York has maintained that each contract represents a bet.
With many states creating cases on similar grounds, the dispute turns to a broader constitutional question. The final decision from the United States Supreme Court could determine whether the betting markets fall under a single federal framework or remain subject to state gambling laws.
