Wisconsin DOJ Sues Coinbase, Kalshi and 3 More Over Sports Betting Event Contracts

TLDR:

• Wisconsin sued five firms over sports contracts it says function like illegal sports betting.
• Kalshi says federal law and CFTC oversight place prediction markets outside state control.
• Coinbase cited a Third Circuit ruling against state-by-state regulation of derivatives.
• DOJ seeks injunctions to block sports event contracts for Wisconsin-based customers.

Wisconsin’s Department of Justice has filed lawsuits against Coinbase, Kalshi, Robinhood, Polymarket, and Crypto.com over sports-related event contracts offered to state residents. 

The state argues these contracts function as illegal sports betting rather than lawful financial products regulated under federal law. 

Officials want the court to stop the companies from making these contracts available in Wisconsin. The legal fight now places state gambling law against federal oversight of prediction markets.

Wisconsin DOJ Challenges Sports Event Contracts Offered by Crypto Platforms

The lawsuits were filed in Dane County and focus on sports-based event contracts tied to game outcomes. Wisconsin says these products mirror ordinary sports wagers because users place money on results and receive payouts based on odds.

According to the state, labeling them as event contracts does not change their practical function. The DOJ argues the companies profit from facilitating these wagers just like traditional sportsbooks.

The complaints name Kalshi, Robinhood, Coinbase and its affiliates, Polymarket and its affiliates, plus Crypto.com and related entities. The state says all of them made these markets available to customers inside Wisconsin.

Attorney General Josh Kaul’s office is seeking both preliminary and permanent injunctions. It also wants a formal court declaration that these offerings violate Wisconsin gambling laws and create a public nuisance.

The release highlighted Kalshi’s reported revenue to support its position. The DOJ said Kalshi generates more than $1 billion annually, with about 90% of estimated annualized revenue tied to sports contracts.

That figure was used to argue the platform operates more like a sports betting business than a financial exchange. Wisconsin says this strengthens its claim that the contracts fall under unlawful commercial gambling.

Coinbase and Kalshi Push Back on Federal Jurisdiction Claims

Kalshi responded by saying it operates as a federally regulated nationwide exchange for real-world events. The company argued its platform differs from state-regulated sportsbooks and casinos.

In comments shared by journalist Jason Calvi on X, Kalshi said courts have already recognized its position. The company added that it remains confident in its legal arguments.

Coinbase also pushed back and pointed to federal oversight through the Commodity Futures Trading Commission. Chief Legal Officer Paul Grewal said Congress created uniform federal supervision for derivatives markets.

Grewal cited a Third Circuit ruling and said state enforcement against prediction markets creates the exact regulatory patchwork Congress intended to replace. He argued Wisconsin should accept clear CFTC oversight instead of separate state action.

The dispute reflects growing pressure around prediction markets and crypto-linked platforms offering sports contracts. Several companies now face a direct legal test over whether these products qualify as regulated derivatives or illegal gambling.

The outcome could shape how other U.S. states approach event contracts tied to sports and politics. It may also influence how crypto platforms structure similar products moving forward.

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