Wisconsin Seeks Preliminary Injunction to Block Sports Event Contract Trading on Kalshi, Coinbase, and Robinhood

Wisconsin escalated its legal fight against prediction market platforms this week, filing a formal motion for a preliminary injunction in the United States District Court for the Western District of Wisconsin that would block Kalshi, Coinbase, and Robinhood from offering sports event contract trading to people in the state while the underlying lawsuit proceeds. If granted, the injunction would freeze sports-related prediction market activity in Wisconsin until the court rules on the merits of the case.

Wisconsin’s attorney general filed the motion Tuesday, arguing that trading sports event contracts on the three platforms constitutes illegal sports wagering under state law. The motion describes the activity as “open, repeated, ongoing criminal violations” of Wisconsin’s gambling statutes and argues that the state’s population is suffering irreparable harm from the continued availability of the contracts. The state also argues that blocking the platforms would have a greater positive impact for Wisconsin residents than it would have negative implications for the defendants.

A Case That Could Shape the Seventh Circuit

The Wisconsin case is notable for two reasons beyond its direct legal stakes. First, Wisconsin is one of the few states to have named Coinbase and Robinhood promo code as direct defendants alongside Kalshi, treating the intermediary platforms as co-responsible for enabling the trading rather than focusing only on the regulated exchange. Second, the Seventh Circuit Court of Appeals — which covers Wisconsin — has not yet issued any decision in the broader federal-versus-state dispute over prediction market jurisdiction, making the outcome of this litigation a potential precedent-setter for the entire midwest region.

That circuit-level silence matters. Courts in other jurisdictions have issued conflicting rulings on whether prediction market event contracts fall under the exclusive jurisdiction of the federal Commodity Futures Trading Commission or are subject to state gambling enforcement. The Third Circuit has ruled in favor of federal preemption, allowing Kalshi promo code to operate in New Jersey despite state objections. The Seventh Circuit ruling, when it comes, could create a split that eventually reaches the Supreme Court.

The CFTC has been an active participant in the broader dispute, filing its own lawsuits against multiple states — including Wisconsin — arguing that the agency holds exclusive jurisdiction over prediction market platforms under the Commodity Exchange Act. That federal intervention has created an unusual dynamic in which the Wisconsin case involves not just the state and the private defendants, but also competing assertions of federal and state regulatory authority.

The Broader Legal Landscape

Wisconsin’s injunction motion is part of a rapidly expanding legal battle involving at least a dozen states. The Gambling Insider reported this week that prediction market litigation has advanced in four states simultaneously — Wisconsin, Rhode Island, Illinois, and New Mexico — with each proceeding at a different stage and in different court systems. Illinois recently became the second state to enact a law regulating prediction markets through its fiscal year 2027 budget, requiring exchanges to obtain licensure from state gaming regulators and taxing exchange revenue. Minnesota became the first state to outright ban prediction markets when Gov. Tim Walz signed legislation in May, with that ban set to take effect August 1, 2026.

For Kalshi, Coinbase, and Robinhood, the Wisconsin motion is the next legal hurdle in a case the company did not choose. Kalshi has consistently argued that federal law gives the CFTC exclusive authority over its markets, a position that has prevailed in the Third Circuit but has yet to be tested in the Seventh. The Wisconsin court will now have to decide whether to freeze the platforms’ sports trading activity in the state while the underlying dispute over federal preemption is resolved — a process that legal analysts expect could take until 2027 or beyond to fully play out in the appellate courts.