Wisconsin DOJ Sues Major Prediction Market Platforms Including Kalshi and Polymarket Over Illegal Sports Betting Allegations

Wisconsin Attorney General Josh Kaul launched a major legal offensive on April 23, 2026, against giants of the prediction market industry, including Kalshi, Polymarket, and Coinbase. Attorney General Kaul claimed that these platforms are facilitating illegal sports betting under the name of "event contracts." This lawsuit is expected to be a significant turning point as it directly rejects the industry's core premise that prediction markets are tools for risk hedging and information discovery, instead defining them as traditional gambling activities.

"Thinly veiling illegal activity does not make it legal. The actions of these companies promoting sports betting in Wisconsin must stop."

The Wisconsin Department of Justice officially announced the filing of the lawsuit during a press conference on the afternoon of April 23, 2026. The targets of the lawsuit include Kalshi, Coinbase, Polymarket (Blockratize, Inc.), Robinhood, and Crypto.com (Foris Dax Markets, Inc.). The state government specified that these companies are violating state law by selling sports-related prediction products to Wisconsin residents.

Multifaceted Legal Action and Status of Defendant Companies

This lawsuit is unusual in that it targets major players across the entire industry simultaneously rather than focusing on a single specific company. While each platform operates through different legal entities, the Wisconsin DOJ determined that they are all essentially providing the same illegal gambling services. The table below summarizes the major companies named as defendants in this lawsuit, their legal entities, and the primary allegations.

• Polymarket: Operates under the corporate name Blockratize, Inc. and is considered a leader in decentralized prediction markets.
• Crypto.com: Provides related services through Foris Dax Markets, Inc.
• Kalshi: Has maintained that it is a legal event contract market through KalshiEX LLC.
• Coinbase and Robinhood: Recently integrated prediction market features through Coinbase, Inc. and Robinhood Crypto, LLC, respectively.

Wisconsin cited violations of state law sections 945.03(1m)(b), (c), and (g) in its complaint. The state government has defined the operation of these platforms as a "public nuisance" and is seeking an injunction to permanently ban the trading of sports-related contracts within Wisconsin. Notably, instead of seeking monetary damages, the state government is aiming for the immediate cessation of specific trading activities.

Attorney General Kaul criticized the platforms for borrowing the language of investment and asset management, stating that it is merely a means to bypass state gambling laws. Prediction market platforms have long argued that their services increase market efficiency by predicting the outcomes of economic indicators or political events. However, the Wisconsin DOJ maintains the position that betting money on the outcome of sports matches constitutes clear gambling, regardless of its form.

Conflict with Federal Jurisdiction and Industrial Impact

This lawsuit is situated within the larger context of a jurisdictional dispute between the U.S. Commodity Futures Trading Commission (CFTC) and state governments. The CFTC has claimed exclusive jurisdiction over commodity derivatives, including prediction markets, but has faced strong pushback from state governments. In fact, in February 2026, the CFTC withdrew a proposed rulemaking regarding event contracts as state-level lawsuits and regulatory movements intensified.

Wisconsin's action is likely to provide a blueprint for other state governments to regulate prediction markets. In particular, it is expected to pose a significant legal risk to fintech companies like Robinhood and Coinbase, which have recently sought to expand their user bases by integrating prediction market features into their apps. Industry experts believe the outcome of this lawsuit will serve as an important precedent for determining the legality of prediction markets in the United States.

Future legal proceedings are expected to center on a hearing for a preliminary injunction. If the court grants the state's request and issues an injunction, the platforms must immediately stop providing sports-related contract services to Wisconsin residents. Currently, the market's primary interest is whether the defendant companies will continue their services during the litigation or preemptively restrict services within Wisconsin.