- The state of Wisconsin has sued prediction market platforms in a fresh legal filing.
- Wisconsin follows in the steps of New York, which sued unlicensed prediction platforms.
- Prediction market participants argue their platforms are subject to federal oversight.
Wisconsin, a state in the upper Midwest region of the United States, has initiated a lawsuit against prediction market platforms. In the latest development, the state filed a fresh legal challenge in Dane County, naming Crypto.com and its derivative arm, Polymarket, and Kalshi.
Wisconsin’s Stance on Prediction Platforms
The state also included the platform’s distribution partners, including Robinhood and Coinbase, in the case, arguing that the platforms enable event-based wagering for residents, including contracts tied to the outcome of sporting events.
It is worth noting that the core of Wisconsin’s lawsuit claims that users pay to take positions on real-world events and receive fixed payouts if correct. According to the state, such a structure fits its legal definition of a bet. It cited contracts linked to NCAA tournament games as an example, with positions trading at probability-based prices and settling at $1 or $0, depending on the result.
The State’s ‘Technical’ Evidence
Part of the evidence introduced by the state of Wisconsin focused on the marketing language used to advertise the prediction market products. Wisconsin stated that Kalshi’s promotional material described it as “The First Nationwide Legal Sports Betting Platform.” Meanwhile, Polymarket has defined itself as a place that affords users the opportunity to bet on future events.
Wisconsin’s stance against the affected platforms also revolves around the collection of transaction fees for each contract. Prosecutors compare this to casinos taking a cut from wagers that users place on their floors.
A Similar Situation in New York
Before Wisconsin, New York took a similar approach by suing Coinbase Financial Markets and Gemini Titan. The New York Attorney General Letitia James accused both entities of operating unlicensed prediction markets. According to her argument, these firms offered event-based contracts tied to sports and elections without approval from the New York State Gaming Commission. The same contracts were accessible to users below the legal betting age of 21.
Attorney James considers the activities of the named entities as gambling. According to her, it is what it is, no matter under what name it goes. According to Letitia, such activities are not exempt from regulation under New York’s state laws and Constitution.
Industry Participants Push Back
In the meantime, industry participants, including those included in the Wisconsin filing, are pushing back, citing federal oversight. In its argument, Coinbase maintained that such disputes should be treated at the federal high court and not at the state level.
Besides Coinbase, other platforms operating through Kalshi maintain their classification of event contracts as swaps under the jurisdiction og the Commodities Futures Trading Commission (CFTC).
Related: Polymarket Lawsuit Challenges Massachusetts Authority Over Prediction Markets
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