CFTC Suffers Setback as Wisconsin Judge Denies Bid to Block Prediction Market Enforcement

A federal judge in Wisconsin has dealt a significant blow to the Commodity Futures Trading Commission’s effort to shield prediction market platforms from state gambling enforcement, denying the agency’s request for a preliminary injunction that would have blocked Wisconsin from applying its gambling laws to companies like Kalshi and Crypto.com. The ruling, issued Wednesday by Judge William Griesbach of the U.S. District Court for the Eastern District of Wisconsin, marks the latest setback for the CFTC as it tries to maintain exclusive federal oversight of sports-related event contracts across multiple states.

The case stems from an April lawsuit the CFTC filed against Wisconsin after the state’s Department of Justice sued five prediction market operators — Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase — alleging their sports event contracts amounted to unlicensed sports betting under Wisconsin’s gambling statutes. The CFTC argued that because these platforms are federally registered, their contracts qualify as swaps regulated exclusively under the Commodity Exchange Act, putting them beyond the reach of state gambling law.

Judge Rejects the “Swaps” Argument

Griesbach wasn’t convinced. He found that the CFTC had failed to demonstrate it was likely to succeed on the merits, that it would suffer irreparable harm, or that the balance of equities favored blocking Wisconsin’s enforcement — any one of which would have been grounds to deny the injunction. Central to his reasoning was skepticism that sports-related event contracts even meet the legal definition of a swap in the first place.

“Wisconsin’s gambling statutes do not conflict with federal commodities regulations and are not preempted by them,” Griesbach wrote, addressing the CFTC’s separate preemption argument. The judge went further, noting that even if event contracts were found to satisfy the Commodity Exchange Act’s definition of swaps, the CFTC would still be unlikely to prevail on the theory that federal law wipes out the state’s gambling code. He explained that the CEA’s grant of “exclusive jurisdiction” applies to the CFTC in contrast to other federal agencies — not in contrast to state law altogether, a distinction that undercut the heart of the agency’s case.

The court also denied motions from Kalshi and Crypto.com to intervene in the federal dispute and seek their own preliminary relief, leaving the two platforms without a direct seat at the table in the CFTC’s fight on their behalf.

Part of a Growing, Divided Legal Landscape

Wisconsin’s win comes amid an increasingly fractured national picture for prediction markets and sports contracts. Judge Griesbach’s language echoed a similar ruling from Judge Analisa Torres in Kalshi’s ongoing dispute with New York, where the court likewise found that state gambling law applies to Kalshi’s sports-related contracts without being preempted by federal commodities law. That stands in contrast to the Third Circuit, which has sided with Kalshi’s position that federal law can preempt state restrictions in New Jersey — underscoring just how unsettled this area of law remains as it works toward likely appellate resolution.

With the injunction denied, legal analysts expect the underlying Wisconsin lawsuits against the five platforms to be remanded to state court due to a lack of “complete preemption,” where state judges could move to bar the companies from offering sports contracts within Wisconsin. The CFTC has already signaled it will appeal Wednesday’s ruling, with a spokesperson telling reporters the agency was “disappointed” in the outcome and would “continue to vigorously defend our jurisdiction over these markets.” That appeal is expected to head to the Seventh Circuit in Chicago.

What It Means for Bettors and Operators

The decision adds Wisconsin to a lengthening list of states pushing back against prediction markets offering sports outcomes, following restrictions already facing Kalshi in states like Nevada, Michigan, and Massachusetts. Notably, Wisconsin is also currently working toward launching regulated, statewide online sports betting, though it isn’t live yet — meaning the state has its own commercial interest in how sports wagering gets classified and taxed within its borders. For bettors weighing where to place sports wagers as this legal landscape shifts, comparing options through a sportsbook reviews resource remains a more stable bet than relying on prediction markets whose legality is still being litigated state by state. As more states test this same legal theory in court, the outcome of the CFTC’s appeal could end up shaping whether prediction markets can keep offering sports contracts nationwide or get pushed back toward a state-by-state regulatory model resembling traditional sportsbooks.