CFTC suffers setback in Wisconsin prediction markets dispute
A US District Court for the Eastern District of Wisconsin has denied the Commodity Futures Trading Commission’s (CFTC) request for a preliminary injunction in its legal dispute over sports-related prediction markets. The ruling allows Wisconsin to continue enforcing its gambling laws against prediction market operators while the case proceeds, as reported by gaming attorney and sports betting legal expert Daniel Wallach.
Judge William Griesbach ruled that the CFTC was not entitled to preliminary relief, marking a procedural win for the state. The case centres on whether sports-related event contracts should be regulated under the Commodity Exchange Act (CEA) as federally supervised financial products or treated as sports betting subject to state gambling laws.
Why CFTC sought relief
When Wisconsin began enforcing gambling laws against prediction market providers, the CFTC sought a preliminary injunction. It maintained that contracts for future events that can be bought and sold on federally regulated exchanges should be classified as financial derivatives under the CEA rather than gambling instruments governed by state law. The CFTC believes that regulating such contracts at state level would result in an inconsistent and unstable situation within federally regulated markets.
However, Judge William Griesbach determined that the CFTC had not met the legal requirements for an injunction. These include demonstrating a likelihood of success, irreparable harm, and that the balance of equities favours injunctive relief. The judge found that the agency had not established these requirements.
The court also questioned whether contracts for sporting events are considered swaps and derivatives subject to federal commodities legislation. Furthermore, the court concluded that Wisconsin’s gambling statutes do not conflict with federal legislation.
BREAKING: CFTC loses BIG in Wisconsin, as federal court denies its motion for preliminary injunction and holds that sports-event contracts are not "swaps," and, that even if they satisfied definition, CFTC is unlikely to prevail on its argument that the CEA preempts state law. pic.twitter.com/a9vf8HfKIc
— Daniel Wallach (@WALLACHLEGAL) July 29, 2026
Federal vs. state authority
A fundamental issue is whether contracts for sporting events should be governed by federal or state law. Since the repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018, states have had broad flexibility to regulate sports betting, resulting in a variety of systems with different licensing, tax rates, and consumer protections.
However, the CFTC claims that prediction markets are covered by the CEA. Thus, prediction markets are federally regulated financial instruments. Wisconsin, on the other hand, claims that betting on sporting events is comparable to gambling and therefore falls under the state’s gambling laws. Judge William Griesbach agreed at the preliminary stage.
State targets prediction market operators
Wisconsin has become one of nine states caught up in legal disputes over prediction markets, as the CFTC continues to defend its authority over the sector. At the heart of the debate is whether sports event contracts should be treated as federally regulated financial products or as sports betting, which is typically governed by state laws.
Wisconsin Attorney General Josh Kaul filed a lawsuit against five prediction market operators, alleging that they were effectively running illegal gambling operations for the state’s residents. The argument is that describing betting transactions as investments does not change their fundamental nature.
Kaul argued that if consumers are placing money on the outcome of sporting events, those activities should fall under Wisconsin’s gambling laws rather than federal commodities regulation.
The lawsuits against prediction market platforms are only one part of Wisconsin’s wider legal involvement in the issue. The state is also connected to a separate legal challenge involving the Ho-Chunk Nation, a federally recognised tribe that operates casinos in Wisconsin.
Meanwhile, Kalshi lost another case in New York this week, adding to setbacks in Nevada and Michigan, where it has already had to limit operations.
Minnesota’s different outcome
While Wisconsin denied the CFTC’s request for emergency relief, Minnesota reached a different conclusion. A federal judge temporarily blocked Minnesota’s new prediction market law, stopping it from taking effect while the case continues. The injunction keeps the current regulatory framework in place for now.
Judge Katherine Menendez found that the plaintiffs had shown a sufficient likelihood of success on their federal pre-emption arguments to warrant temporary relief. The ruling does not determine whether prediction markets will eventually be permitted in Minnesota, but it does prevent the ban from being enforced immediately. For operators, this is a temporary victory that allows them to continue offering sports event contracts until the court reaches a final decision.
NCLGS resolution
Recently, the National Council of Legislators from Gaming States (NCLGS) voted unanimously in favour of state and tribal control over gambling regulation. Legislators were concerned about the federal government’s growing authority over prediction markets, which could have an impact on the existing regulatory system.
The resolution acknowledges the importance of tribal sovereignty. Many tribes operate gaming facilities through tribal-state compacts. Any expansion of prediction markets will create legal and economic challenges for both.
Over the coming months, prediction markets will remain a major issue in the United States. First, the CFTC is likely to challenge the Wisconsin ruling, and additional litigation is pending in federal courts. At the same time, state authorities are likely to continue enforcing their own gambling laws on sports betting.
Another development will be the CFTC’s proposed rules on sports-related contracts. Clearer federal regulations could guide the courts, but disputes may continue if states maintain that gambling regulation is their responsibility. Congress could also intervene by amending federal law to clarify whether sports prediction markets fall under commodities regulation, gambling regulation, or a combination of both.
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