Federal Judge Denies CFTC Bid to Block Wisconsin Prediction Market Enforcement

A federal judge in Wisconsin has dealt the Commodity Futures Trading Commission a significant setback in its nationwide fight to shield prediction markets from state gambling law, denying the agency’s request for a preliminary injunction against the state. The ruling, handed down Wednesday by U.S. District Judge William Griesbach of the Eastern District of Wisconsin, clears the way for the state to continue pursuing enforcement action against platforms offering sports-related event contracts.

The decision is the latest blow in a sprawling legal battle over whether prediction markets like Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase can operate sports contracts under federal commodities oversight without also needing state gambling licenses.

How the Wisconsin Case Got Here

The dispute traces back to April, when Wisconsin filed lawsuits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, alleging that their sports-related event contracts amounted to unlicensed sports betting under the state’s commercial gambling statute. The CFTC responded by suing Wisconsin directly, arguing that because these platforms are federally registered and regulated as derivatives exchanges, state gambling law has no authority to interfere with contracts the agency considers financial instruments.

The CFTC asked the court for a preliminary injunction that would have barred Wisconsin from enforcing its gambling statutes against the five platforms while the underlying case played out. Judge Griesbach rejected that request outright, ruling that the CFTC failed to show it was likely to succeed on the merits, that it would suffer irreparable harm, or that the balance of equities favored blocking the state.

Judge Rejects the “Swaps” Argument

Central to the CFTC’s case was the claim that sports-related event contracts qualify as “swaps” under the Commodity Exchange Act, a category of financial derivative subject to exclusive federal jurisdiction. Griesbach disagreed, writing that the agency had not shown it was likely to prevail on that argument. He noted a recent Third Circuit ruling that found Kalshi’s sports contracts do meet the definition of swaps, but pointed out that the appellate court “did not identify any way in which compliance with state law would require a regulated party to violate federal law.”

“For this reason alone, the CFTC’s motion for a preliminary injunction would be denied,” Griesbach wrote.

The judge went further, addressing the preemption question even though the swaps finding alone was sufficient to deny the injunction. He rejected the CFTC’s argument that federal commodities law overrides Wisconsin’s gambling statutes, writing that “Wisconsin’s gambling statutes do not conflict with federal commodities regulations and are not preempted by them.” He added that even if the contracts were treated as swaps, “the CFTC’s express preemption argument fails because the CEA’s grant of ‘exclusive jurisdiction’ applies to the CFTC in contrast to other [federal] agencies, not in contrast to other laws.”

Griesbach also rejected motions from Kalshi and Crypto.com to intervene in the case and seek their own preliminary relief. On the underlying question of whether Wisconsin’s gambling law even applies to these contracts, the judge noted that interpreting the statute is “ultimately a state-law question,” but added that the “plain” wording of Wisconsin’s commercial gambling statute “seems to cover” the sports-related event contracts offered by CFTC-registered platforms.

What Comes Next

The ruling opens the door for Wisconsin to move forward with civil enforcement against the prediction market operators, and legal observers expect the state’s removed lawsuits against Kalshi, Polymarket, Crypto.com, Coinbase, and Robinhood to be remanded to state court given the finding of no “complete preemption.” State courts could then move to issue their own injunctions barring the platforms from offering sports contracts within Wisconsin.

A CFTC spokesperson said the agency was “disappointed to see the court’s ruling” and confirmed it will appeal, with legal experts anticipating an interlocutory appeal to the Seventh Circuit in Chicago. The commission has vowed to “continue to vigorously defend” its claimed jurisdiction over sports-related event contracts.

The Wisconsin decision adds to a growing and increasingly fractured body of case law on this issue. It echoes a similar ruling from Judge Analisa Torres in Kalshi’s case against New York, which likewise found that state gambling laws apply to sports-related event contracts and are not preempted by the Commodity Exchange Act. That stands in tension with the Third Circuit’s stance in New Jersey, where the appeals court sided with Kalshi’s position that federal law can preempt state restrictions — setting up exactly the kind of circuit split that could eventually draw Supreme Court attention.

For now, prediction market operators face a patchwork of outcomes depending on where they operate. Kalshi is already contending with geofencing restrictions tied to sports contracts in states including Michigan, Nevada, and Washington, while its full product line remains blocked in Massachusetts. Wisconsin’s ruling suggests the state could soon join that list, with a stipulated enforcement date and potential daily fines against platforms that continue offering restricted event contracts. For bettors weighing whether to explore where prediction markets are legal, this case is a reminder that the legal ground underneath these platforms is still very much in motion.