Wisconsin’s top law enforcement official has filed lawsuits against several fintech and crypto platforms—including Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com—alleging they enabled illegal sports betting through so-called “event contracts,” according to complaints filed April 23 in Dane County.
Attorney General Josh Kaul is seeking both preliminary and permanent injunctions to stop the companies from offering sports-related markets in the state, along with a court ruling that the activity violates Wisconsin gambling laws and constitutes a public nuisance.
The case highlights a broader legal clash between state gambling regulations and federally overseen prediction markets, as authorities and courts across the U.S. debate whether event contracts should be treated as financial instruments or unlawful wagers.
According to the complaints, sports betting and most forms of commercial gambling have long been illegal in Wisconsin outside limited exceptions, and rebranding such activity as “event contracts” does not change its underlying nature.
According to the filings, the platforms offer contracts that “pay out money based on the outcome of real-world events,” while charging trading fees and generating revenue from Wisconsin users in violation of state law. The lawsuits single out Kalshi, claiming sports-related contracts make up nearly 90% of its business and citing estimates that such products generate more than $1 billion in annualized revenue.
State pressure widens beyond Wisconsin
The legal action comes as state-level enforcement against similar products expands across the U.S., even as federal regulators debate how to classify them.
On April 3, a judge in Nevada extended an order blocking Kalshi from offering sports markets there, treating them as unlicensed gambling. Authorities in Arizona have also pursued enforcement actions targeting the company’s sports-related contracts.
At the federal level, the Commodity Futures Trading Commission and the US Department of Justice have, in some cases, supported the view that certain event contracts fall under derivatives regulation rather than state gambling laws. However, state regulators and attorneys general have often taken the opposite stance.
This divide has intensified as courts weigh in. Kalshi secured a favorable federal appellate ruling on April 6 that limited New Jersey’s ability to enforce its gambling laws against certain CFTC-regulated sports contracts.
Meanwhile, scrutiny is growing for Robinhood, Coinbase, Polymarket, and Crypto.com beyond Wisconsin. In January, regulators in Tennessee issued cease-and-desist orders to Kalshi, Polymarket, and Crypto.com, directing them to halt sports event contracts for residents, void existing wagers, and refund users over allegations of unlicensed betting.
Robinhood and Coinbase have expanded into event contracts through non-exclusive distribution deals with Kalshi, routing user orders to its prediction markets. Robinhood’s platform has processed billions in volume, enabling trades on outcomes across sports, macroeconomic data, and politics. Similarly, Coinbase’s Kalshi-powered markets allow users nationwide to trade on real-world events, drawing scrutiny from regulators including New York Attorney General and other state authorities.
