• Federal Court Denies CFTC’s Bid To Enjoin Wisconsin’s Enforcement Of Gambling Laws Against Prediction Markets

  08/04/2026

  On July 28, 2026, the U.S. District Court for the Eastern District of Wisconsin denied a motion for a preliminary injunction filed by the United States of America and the Commodity Futures Trading Commission (collectively, “CFTC”), seeking to bar the State of Wisconsin (“Wisconsin”) from enforcing its gambling statutes against five prediction markets (“Companies”).  United States v. Wisconsin, No. 26-C-749 (E.D. Wis. July 28, 2026).  At the same time, the Court denied related motions by (i) Wisconsin to change venue and to dismiss the action for lack of standing, (ii) two of the prediction markets to intervene in the CFTC action as plaintiffs, and (iii) the American Gaming Association to intervene as a defendant.

  The dispute arose after Wisconsin brought civil enforcement actions on April 23, 2026, against various prediction markets, each of which is registered with the CFTC as a designated contract market (“DCM”) and a futures commission merchant (“FCM”).  DCMs are authorized under the Commodity Exchange Act (“CEA”) to list futures, options on futures and swaps for trading.  Wisconsin alleges that the sports-related event contracts offered by the Companies constitute illegal gambling under Wisconsin law.¹  On April 28, 2026, the CFTC responded by suing Wisconsin directly, arguing that the event contracts are “swaps” subject to the exclusive jurisdiction of the CFTC under the CEA.  The CFTC contends that the CEA preempts Wisconsin’s gambling statutes as applied to such contracts.  The CFTC has filed similar suits against the States of New York, Arizona, Connecticut, and Illinois, along with amicus briefs in the U.S. Court of Appeals for the Ninth Circuit and the Supreme Judicial Court of Massachusetts.  The CFTC has framed this litigation as necessary to preserve its exclusive jurisdiction over derivative products traded on DCMs.

  While the Court found that the CFTC had standing to bring the action based on its allegation that Wisconsin’s enforcement efforts interfere with the national public interest underlying the CEA, it denied the requested injunction on the merits.  The Court concluded that the CFTC had not shown a likelihood of success in establishing that sports-related event contracts qualify as “swaps” under the CEA, reasoning that Congress intended the term to capture financial instruments tied to traditional economic indicators, not the outcome of sporting events.

  The Court held further that, even if such contracts were swaps, the CEA’s grant of “exclusive jurisdiction” to the CFTC does not expressly, by field, or by conflict preempt Wisconsin’s gambling laws, noting that compliance with the State’s stricter gambling statute does not require any company to violate federal law.  The Court determined that the CFTC had failed to demonstrate irreparable harm or that the balance of equities favored an injunction, noting that the State has a recognized interest in exercising its traditional police powers to address the risks of gambling addiction.

  While several district courts, including in Maryland, Nevada, Ohio, and Michigan, have similarly declined to enjoin state gambling enforcement against prediction markets, the Third Circuit reached the opposite conclusion, and other courts have granted injunctions in favor of prediction markets.  For example, the Wisconsin ruling came just a day after the CFTC secured the opposite result in Minnesota federal district court, obtaining a preliminary injunction blocking a state prediction market ban that had been set to take effect on August 1, underscoring how outcomes are currently turning on the district in which a case is filed.

  This string of litigation signals a growing question over who gets to regulate prediction markets as the industry continues to expand, with the CFTC, state attorneys general, gaming regulators, and industry participants all staking out competing positions across dozens of jurisdictions.  Absent Supreme Court intervention or new legislation clarifying the CEA’s reach, we expect continued fragmentation, with the same product potentially lawful in one state while prohibited in another.

  Footnote

  1. Plaintiffs allege defendants violated Wis. Stat. § 945.03, which prohibits commercial gambling and causing a public nuisance.

  Categories: CFTC,  Civil Enforcement,  Investigations,  Judicial Opinions,  Regulatory Enforcement
  

Links & Downloads

• WISCONSIN PREDICTION MARKET CRACKDOWN ENDURES CFTC CHALLENGE
  
• UNITED STATES OF AMERICA ET AL V. STATE OF WISCONSIN ET AL - ENTRY 54
  
• CFTC SUES WISCONSIN TO REAFFIRM ITS EXCLUSIVE JURISDICTION OVER PREDICTION MARKETS _ C
  
• CFTC LOSES KEY FEDERAL COURT RULING IN WISCONSIN