A federal judge has denied the U.S. Commodity Futures Trading Commission’s bid to block Wisconsin from enforcing its gambling laws against sports‑related event contracts, giving the state an early win in a high‑profile dispute over prediction markets.
In a 28‑page ruling, Judge William C. Griesbach found that the Commission failed to show a likelihood of success on the merits, did not demonstrate irreparable harm, and could not prove that the balance of equities favored it.
The case hinges on whether contracts tied to sporting events offered through prediction markets are financial derivatives under federal law or illegal gambling under state law.
Wisconsin’s civil action, launched in April, targets companies such as Coinbase, Kalshi, Robinhood, Polymarket and Crypto.com, accusing them of facilitating unlawful sports betting by disguising wagering products as financial trades.
The state argues that sports betting is prohibited except through tribal gaming operations and cites NCAA tournament contracts that pay out on winning positions, likening them to traditional sportsbook wagers.
Judge Griesbach rejected Wisconsin’s request to move the case to the Western District of Wisconsin and dismissed the argument that the federal government lacked standing, finding the agency’s allegations sufficient for standing.
Intervention requests by Kalshi, Crypto.com’s derivatives arm and the American Gaming Association were denied, with the judge noting that the existing parties adequately represented the interests involved.
The judge expressed skepticism toward the Commission’s interpretation of federal commodities law, concluding that it was unlikely to succeed on the argument that the Commodity Exchange Act’s definition of swaps covers the event contracts.
He also found no clear evidence that federal law preempts Wisconsin’s gambling restrictions, indicating that Congress did not intend to strip states of their traditional regulatory authority.
The opinion rejected the claim that Wisconsin law conflicts with federal regulations, stating that companies can comply with both regimes because federal law permits but does not require the offering of such contracts.
The Commission was not shown to have suffered irreparable harm; potential financial consequences for the companies do not meet the threshold for a preliminary injunction.
Judge Griesbach noted that the balance of equities favored Wisconsin, citing the state’s vested interest in policing gambling‑related harms, including addiction.
The ruling allows Wisconsin to pursue its enforcement actions while the litigation continues, reflecting the state’s growing assertiveness toward prediction markets.
Recent actions include a warning from the Wisconsin Elections Commission that residents may not legally bet on an election and vote in the same contest, and an executive order restricting government employees from using confidential information to profit from prediction markets.
The judge concluded that, because the Commission failed on merits, irreparable harm, and balance of equities, the request for a preliminary injunction was denied, and the case will proceed to the next stage of litigation.
