(AsiaGameHub) –   Prediction market platforms are no strangers to legal challenges, and the recent lawsuits initiated by the Wisconsin Department of Justice are no different. The state has taken action against prediction market platforms, asserting that they have facilitated and specifically enabled “illegal sports gambling.”

Wisconsin Becomes the Latest State to Call Prediction Markets Illegal Gambling

The core of Wisconsin’s argument is straightforward: trades on sports event contracts should be subject to local gaming laws. However, prediction markets like Kalshi and Polymarket contend that federal law, overseen by the Commodity Futures Trading Commission (CFTC), takes precedence. 

This has led to a legal tug-of-war between states filing lawsuits and prediction markets responding in kind. Wisconsin’s latest legal action names all major prediction market platforms operating within the state, including Crypto.com, Polymarket, Coinbase, Robinhood, and Kalshi.

Wisconsin contends that these companies are offering conventional gambling products through their sports event contracts. State Attorney General Josh Kaul stated:

“These companies have chosen to flout Wisconsin law by thinly disguising the sports betting that they facilitate through what are called event contracts. But our position in this case is that event contracts are no different than ordinary sports bets.” 

Lawmakers Are Split on What the Best Course of Action Is

Concurrently, a U.S. senator is attempting to have prediction markets officially classified as gambling, a significant undertaking despite general opposition to the sector. 

While many lawmakers acknowledge the need for a functional framework to resolve the dispute over the legality of sports event contracts, a considerable number among them are hesitant to condemn the sector in the strongest terms. 

Meanwhile, other states have adopted a similar approach, expressing serious concerns about the growing prevalence of prediction markets and what they perceive as a blurring of the lines between investing and gambling. 

In Massachusetts, lawmakers have voiced worries about minors engaging with prediction markets, noting that individuals under 21 can access these platforms and are “too young to gamble.” 

Recently, the New York attorney general’s office has pursued action against two prediction market platforms, specifically Coinbase Financial Markets and Gemini Titan. In response, prediction markets have also mounted a defense. Kalshi, for instance, has initiated lawsuits across the country, sometimes preemptively.

The CFTC has also taken a proactive stance, filing counter-lawsuits against several states, alleging that they are attempting to override federal legislation.