Judge rejects CFTC bid to stop Wisconsin prediction market crackdown
A federal judge in Wisconsin denied the CFTC's request for a preliminary injunction on July 29, rejecting the agency's bid to block state gambling enforcement against prediction market platforms. The court ruled the CFTC was unlikely to prove that sports event contracts qualify as swaps under federal law. Wisconsin Attorney General Josh Kaul had sued Kalshi, Polymarket, Crypto.com, and Robinhood over the contracts. The ruling allows Wisconsin's crackdown to proceed while litigation continues.
Kalshi and Polymarket lose another state preemption battle, this time in a federal courtroom. Wisconsin can now enforce its gambling laws against both platforms despite their CFTC registration. Traders holding sports event contracts face sudden voiding risk if Wisconsin acts. Each additional state loss multiplies parallel litigation costs and forces geofencing decisions market by market.
The Second Circuit appeal remains the only path to a single national standard, but that court may not rule before more states follow Wisconsin's playbook. For now, state gambling law is the practical floor operators must build around, not the federal order they registered under.