Wisconsin Tries New Tactic In Kalshi Injunction Request

A new front is forming in the fight against sports prediction markets.

The state of Wisconsin formally filed a request for an injunction against Kalshi and its partners in the US District Court for the Western District of Wisconsin on Thursday. In it, the state accuses the operator of illegally offering sports betting, thereby harming the public health of residents.

While several other states have filed similar requests, Wisconsin’s uses a new tactic to circumvent arguments used to protect prediction markets.

In the filing, Wisconsin addresses the Commodity Exchange Act, which the Commodity Futures Trading Commission argues qualifies sports contracts as a type of “swaps”. This preempts state gambling laws, allowing operators to offer sports markets in all 50 states.

The state acknowledges that other markets from prediction operators are covered, but those for sports are not. It argues that the law is meant to apply only to areas where there is no room for supplementary state legislation, citing a 2020 Kansas case. 

Since states have robust gambling laws, Wisconsin argues the CEA shouldn’t apply.

No other US markets have advanced this argument, making it a new challenge for Kalshi’s legal team.

The filing comes just weeks after Governor Tony Evers signed off on a bill to officially legalize sports betting in Wisconsin. 

New Courts Will Deliver Rulings on CEA

Wisconsin’s filing isn’t the only new frontier in the fight over sports contracts.

The Western District has yet to rule on any cases involving the industry, making its stance hard to predict. 

Assuming its ruling is appealed, the US Seventh Circuit Court of Appeals would also issue its first ruling. The Seventh is one of the only courts not to have ruled on a case involving prediction markets, adding weight to whatever ruling it delivers.

The state hopes that the combination of its new argument and the lack of prior court rulings will lead to a favorable result. 

Unfortunately, we may never know if that combination will pay off. That’s a result of the many other cases already advancing towards the US Supreme Court. Once the nation’s highest court issues a ruling, it will be applied to other lawsuits, including those involving Wisconsin.