Prediction market lawsuits are moving forward in Wisconsin, Rhode Island, Illinois and New Mexico as state officials, tribal groups and federal regulators fight over sports event contracts. The cases show how quickly the legal dispute around Kalshi, Polymarket and similar platforms has spread across the United States.
The core issue is whether sports event contracts are federally regulated financial products or state-regulated sports betting. Prediction market operators argue that federal commodities law applies, while state officials say sports contracts look like unlicensed gambling.
Wisconsin fight expands
Wisconsin Attorney General Josh Kaul has sued Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase over sports-related event contracts. The state argues that the products function as illegal gambling when users can trade on game outcomes.
The lawsuits seek to stop the companies from offering sports outcome contracts in Wisconsin. The state has also framed the products as a public nuisance because they operate outside its gambling licensing system. The CFTC later sued Wisconsin in federal court to defend its authority over prediction markets. That created a direct fight between state gambling enforcement and federal derivatives regulation.
Rhode Island targets platforms
Rhode Island has also sued Kalshi and Polymarket over sports event contracts. The attorney general’s office argues that the platforms are offering sports betting without following the state’s gambling rules.
The case is important because Rhode Island has a tightly controlled sports betting market. The state allows sports betting through a limited state-backed system, making outside sports prediction contracts a direct challenge.
Kalshi has also taken legal action against Rhode Island officials. The company argues that its contracts fall under federal oversight and should not be blocked by state gambling law.
Illinois remains in federal clash
Illinois is also part of the federal fight over prediction market regulation. The CFTC and Department of Justice sued Illinois earlier this year after state officials moved against prediction market operators. The Illinois Gaming Board had issued cease-and-desist letters to platforms including Kalshi, Crypto.com, Robinhood and Polymarket US. State officials have treated sports and event contracts as products that may fall under gambling regulation.
New Mexico adds tribal issue
New Mexico has added a tribal sovereignty angle to the prediction market fight. Several tribes and pueblos have sued Kalshi, arguing that sports contracts violate tribal gaming rights and state gambling rules.
New Mexico’s attorney general has also filed a separate lawsuit against Kalshi over alleged illegal sports betting. Those cases make the state one of the most active fronts in the debate over prediction markets, tribal compacts and state gaming authority.
