Wisconsin has filed suit against Coinbase, Polymarket, Kalshi, Robinhood, and Crypto.com, arguing that the prediction market products they offer violate state gambling law. In the complaint, the state says these so-called event contracts are effectively bets on sports outcomes, which are illegal in Wisconsin outside tribal casinos.
State says event contracts function like sports wagers
According to the complaint, the products offered on these platforms closely resemble sports betting. Attorney General Josh Kaul said calling them event contracts does not change what they are in practice. The state’s position is blunt: the platforms are facilitating illegal sports betting.
Wisconsin is asking the court to stop the companies from offering those services to users in the state and to declare the conduct a public nuisance in Wisconsin. The case was filed in Dane County, with the state seeking to block sports-related contracts from being made available to local users.
Complaint points to user behavior, fees, and marketing
Wisconsin rejects the idea that these products should be treated as ordinary financial tools. The lawsuit points to three main factors: users are effectively betting on outcomes, the platforms charge fees that resemble betting systems, and marketing materials often present the activity in ways associated with gambling. On that basis, the state argues the contracts should be treated as traditional bets under local law.
The dispute turns on a simple but consequential question. Are these products financial contracts tied to real-world outcomes, or gambling wrapped in market language? Wisconsin is using state gambling law to challenge the core structure of the prediction market model.
Companies answer with a federal regulation defense
The companies deny the allegations. Their argument is that users are not gambling but trading contracts based on outcomes, in a format closer to financial markets. Companies including Robinhood and Kalshi say their services fall under federal oversight by the Commodity Futures Trading Commission (CFTC).
Kalshi has argued in particular that its contracts are lawful financial instruments traded on a regulated exchange, not gambling products. That sets up a direct clash between state and federal views, with one side treating the activity as illegal betting and the other framing it as regulated market trading.
Prediction markets face pressure beyond one state
Wisconsin is not the first state to challenge prediction markets in this way. The source notes that Nevada and New York have raised similar concerns, saying these contracts are no different from gambling. The legal pressure now extends beyond one lawsuit and points to a broader state-level push against the sector.
If Wisconsin prevails, platforms may have to change or limit their services across multiple states. If the companies win, prediction markets may have more room to expand across the United States. For now, the case puts the basic classification issue back at the center of the debate.