Wisconsin Court Denies CFTC Request to Shield Sports Contracts
A federal judge in Wisconsin has refused to grant the Commodity Futures Trading Commission a preliminary injunction, leaving the state free to press ahead with its crackdown on sports‑related prediction markets.
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The CFTC had asked the court to step in after Wisconsin authorities moved against several platforms operating in the state, but the judge rejected the bid, saying the commission’s case did not justify emergency relief.
The commission filed its lawsuit in late April against Governor Tony Evers, Attorney General Josh Kaul and the state’s gaming regulator, arguing that Wisconsin’s actions interfered with federally regulated markets.
That complaint came only days after state officials launched their own cases in state court targeting a group of CFTC‑registered platforms, including Coinbase, Crypto.com, Kalshi and Polymarket, all of which offer event contracts that Wisconsin views as unlawful sports betting.
Judge disagrees with CFTC’s stance on potential FG harm
In its lawsuit, the CFTC argued that Wisconsin was trying to “criminalize” federally regulated markets and step into territory reserved for federal oversight of event contracts.
The commission warned that the state’s “aggressive enforcement” of its gambling laws against CFTC‑registered platforms would cause serious and lasting damage to both the companies involved and the commission itself.
Judge William C. Griesbach did not accept that view. In his order on Wednesday, he found that the CFTC had not shown it would suffer irreparable harm if Wisconsin continued to enforce its laws, nor that it was likely to win on the core legal questions in the case.
He noted that operators offering sports‑related event contracts in Wisconsin could face real financial losses if the state shuts them down, but said it was not clear that the federal government would be harmed in the same way.
The ruling came shortly after a different federal judge in Minnesota granted an injunction against a state ban on prediction markets, showing how divided the courts are on these issues.
Court contends swaps definition, says CFTC’s case “makes no sense”
Griesbach went further than rejecting the CFTC’s request for an injunction, he challenged the core of its legal theory.
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The commission had argued that sports‑related event contracts offered by platforms like Kalshi fall within the Commodity Exchange Act’s definition of “swaps,” putting them under exclusive federal oversight.
Griesbach disagreed. He noted the recent Third Circuit ruling that found Kalshi’s sports contracts do qualify as 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.”
“Notwithstanding the [Third Circuit] majority’s conclusion, this court finds that the CFTC has not shown that it is likely to prevail on its argument that the CEA’s definition of ‘swaps’ covers the event contracts offered by entities such as Kalshi,” he wrote, adding, “For this reason alone, the CFTC’s motion for a preliminary injunction would be denied.”
Griesbach also said that even if the contracts were treated as swaps, the CFTC was still unlikely to prove that the CEA preempts Wisconsin’s gambling laws.
The judge then turned to what he saw as a logical flaw in the commission’s position. The CFTC claims Wisconsin’s gambling statutes do not apply to the sports event contracts at issue, and that if they did, federal commodities law would override them.
Griesbach responded: “Of course, if Wisconsin’s gambling statutes do not cover sports-related event contracts, then the CFTC’s case against the State makes no sense. There is no reason to enjoin the State from enforcing a statute that does not apply.”
He stressed that interpreting Wisconsin’s gambling laws is “ultimately a state-law question,” but said that, for now, the “plain” wording of the state’s commercial gambling statute “seems to cover” the sports‑related event contracts offered by CFTC registrants.
Source: SBC Americas
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