Wisconsin Attorney General Sues Online Prediction Market Companies Over Alleged Illegal Sports Betting
Why It Matters
Wisconsin is taking legal action against several major online prediction market platforms, alleging that the companies are facilitating illegal sports betting in violation of state gambling laws. The lawsuits signal a growing effort by state governments to assert regulatory authority over a rapidly expanding digital marketplace that critics say is operating outside established legal frameworks.
The outcome could affect how prediction markets operate across the country and set precedents for how states enforce gambling regulations against platforms that classify their offerings as financial instruments rather than wagers.
What Happened
Wisconsin Attorney General Josh Kaul announced Thursday that the state Department of Justice filed three separate lawsuits in Dane County circuit court against multiple online prediction market companies, accusing them of working together to facilitate illegal sports betting throughout Wisconsin.
“Except in limited circumstances, sports betting and other forms of commercial gambling have long been illegal in the state of Wisconsin,” Kaul said at a news conference. “No company is above this law, no matter how creatively those companies try to disguise the activity that they’re engaged in.”
The first lawsuit names Kalshi Inc. and four affiliates, Robinhood Markets and two affiliates, and two Coinbase companies. The second targets three companies doing business as Polymarket or its affiliates. The third names Foris Dax Markets and North American Derivatives Exchange Inc., doing business as Crypto.com.
Each suit is filed as a “complaint to abate public nuisance” and asks the court to find the companies in violation of state law and to issue injunctions blocking sports-related trading by Wisconsin users. The state is not currently seeking monetary damages, though Kaul said that option has not been ruled out.
Kaul stated the lawsuits were driven by “a huge increase in this type of activity” in recent years. He said the suits focus specifically on sports betting, which the state alleges constitutes “a very large part” of the activity on these platforms.
The Legal Argument
At the core of Wisconsin’s case is the argument that prediction market “event contracts” are legally indistinguishable from traditional sports bets. Kaul accused the companies of using financial terminology to obscure what he characterized as straightforward gambling activity.
“These companies have chosen to flout Wisconsin law by thinly disguising the sports betting that they facilitate through what are called event contracts,” Kaul said. “But our position in this case is that event contracts are no different than ordinary sports bets.”
The suits allege the companies collect a fee for every bet placed, earning significant revenue from Wisconsin residents in violation of state gambling regulations. As one example cited in the lawsuits, on April 3, 2026, traders on one platform could purchase contracts on the University of Michigan winning a Final Four matchup with the University of Arizona for approximately $0.54 per contract — reflecting a roughly 54% projected win probability. When Michigan won, holders of those contracts received $1 per contract while those who bet on Arizona received nothing.
By the Numbers
3 separate lawsuits filed in Dane County circuit court targeting multiple companies and their affiliates.
$13 billion+ — the estimated monthly revenue generated by online prediction market platforms nationwide, with the bulk coming from sports betting.
11 tribal gaming compacts Wisconsin is preparing to renegotiate to include online sports betting under recently enacted state law.
2021 — the year in-person sports betting at tribal casinos became legal in Wisconsin, establishing the legal baseline Kaul cited in the suits.
$0.54 — the contract price cited in the Crypto.com suit as an example of a sports event contract offered on the platform.
Zoom Out
Wisconsin’s action is part of a broader national wave of state-level scrutiny targeting prediction markets. New York and several other states have filed similar lawsuits citing their own gambling regulations. The emergence of platforms like Kalshi and Polymarket has forced state regulators to confront whether existing gambling laws apply to financial instruments that mimic the structure of traditional sports wagers.
The lawsuits arrive as Wisconsin also prepares to formally expand legal online sports betting. Governor Tony Evers earlier this month signed legislation legalizing online sports betting, conditioned on computer servers being housed on tribal land — a requirement designed to protect tribal gaming interests in the state.
Kaul was clear that the new sports betting law did not directly prompt the lawsuits. “What we are alleging is violations of Wisconsin law, and the allegations would be the same whether or not there had been the new legislation passed,” he said.
What’s Next
The three lawsuits will now proceed through Dane County circuit court. The state is seeking injunctions to block the named companies from facilitating sports-related trading by Wisconsin users. If courts grant the injunctions, the platforms could effectively be shut down for Wisconsin-based customers pending further legal proceedings.
Wisconsin is also expected to continue renegotiating its 11 tribal gaming compacts to bring legal online sports betting into compliance with the newly signed state law. How courts rule on the prediction market suits could influence the pace and terms of those negotiations as the state works to define the boundaries of lawful online gambling within its borders.