Wisconsin Attorney General Josh Kaul filed a lawsuit on April 23, 2026, in Dane County court against Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com, accusing them of running illegal sports betting operations through "event contracts." The complaint seeks preliminary and permanent injunctions to stop these platforms from offering sports-related prediction markets to Wisconsin residents, and asks the court to declare their conduct a public nuisance under state gambling laws.
State Says "Event Contracts" Are Just Gambling in Disguise
The core allegation: dressing bets as event contracts does not change their gambling nature. The platforms list contracts that pay out based on real-world outcomes and charge transaction fees. Wisconsin has long banned sports betting and most commercial gambling, with few exceptions. Earning revenue from in-state users through these contracts violates the law, the state argues.
Kalshi's Sports Contracts Dominate – 90% of Business, Over $1B Annual Revenue
The lawsuit zeroes in on Kalshi, claiming sports-related contracts make up nearly 90% of its volume, generating an estimated annualized revenue above $1 billion. Kalshi markets itself as a compliant derivatives platform, but the state insists it is essentially a gambling operation.
Robinhood and Coinbase Dragged in Over Referral Deals
Robinhood and Coinbase are named as defendants because they route user orders to Kalshi's markets through distribution agreements. Robinhood's event trading hub has processed billions of dollars in volume, offering exposure to sports, macroeconomic data, and political outcomes. Coinbase has integrated Kalshi-powered prediction markets, allowing crypto users to trade contracts tied to real-world events. Regulators worry that large-scale betting is happening under the guise of financial instruments, outside established gambling licensing frameworks.
Growing Conflict Between Federal and State Regulators
Wisconsin's lawsuit highlights a deepening clash between state gambling laws and federal derivatives oversight. The Commodity Futures Trading Commission (CFTC) claims event contracts fall under its purview, but states see them as unlicensed gambling. This split has created a patchwork enforcement environment:
- Nevada's judge recently extended an order barring Kalshi from offering sports contracts in the state.
- Arizona took similar action.
- In January, Tennessee issued cease-and-desist orders against Kalshi, Polymarket, and Crypto.com, demanding refunds.
- New York authorities are currently reviewing the platforms.
Despite the state-level pushback, Kalshi won a federal appeals court ruling that limits New Jersey's ability to apply its gambling law to certain CFTC-regulated contracts. As major brokers and exchanges deepen their involvement, prediction markets are moving closer to mainstream finance. The court battles over jurisdiction will determine whether event contracts can expand as regulated financial products or face the same licensing hurdles as traditional sportsbooks. For platforms and investors, regulatory risk has shifted from federal agencies to unpredictable state-level enforcement.