Prediction markets have a consistent line: their products are financial instruments, not bets. Wisconsin isn't buying it, and in a new complaint targeting Kalshi, Coinbase, Polymarket, Robinhood and Crypto.com, the state is citing the companies' own marketing to call them unlicensed gambling venues.

"Thinly disguising unlawful conduct doesn't make it lawful," Attorney General Josh Kaul said in a press release announcing the complaints on Thursday.

The question underneath the lawsuits is straightforward: are these contracts financial instruments under the Commodity Futures Trading Commission (CFTC), or bets under state gambling law? The answer determines whether a fast-growing market operates under a single federal rulebook or is carved up across 50 states under the jurisdiction of local gaming regulators. And it's almost certainly headed to the Supreme Court.

Wisconsin’s complaints, filed in Dane County, target three parallel ecosystems.

One names Crypto.com and its derivatives arm. Another goes after Polymarket and affiliated entities. A third pulls in Kalshi alongside distribution partners Robinhood and Coinbase (both Robinhood and Coinbase route prediction market orders to Kalshi), arguing the platforms together facilitate sports betting for state residents.

Across all three, the legal theory is that so-called “event contracts” are wagers: users pay money to take a position on a real-world outcome and receive a fixed payout if they are correct.

In one example cited in the filings, traders could buy contracts tied to NCAA tournament games at prices that reflect implied probabilities, with winning positions paying out $1 and losing ones returning nothing.

State prosecutors also cite Kalshi's own Instagram ads, which claim the platform is "The First Nationwide Legal Sports Betting Platform," and Polymarket's, which calls itself "a platform where people can bet on the outcome of future events."

The state argued that the structure of prediction markets falls squarely within its statutory definition of a bet, regardless of how the products are labeled or who takes the other side of the trade.

The complaints also emphasize that platforms generate revenue by charging transaction fees on each contract, likening the model to a casino taking a cut of wagers placed on its floor.

Setting up a federalism fight

The industry’s defense rests on federal preemption. Kalshi, in particular, has argued that its contracts are swaps listed on a regulated exchange and therefore fall under the CFTC’s exclusive jurisdiction.

That position received a boost earlier this month when the Third Circuit sided with the company, treating the regulator’s decision not to block the contracts as effectively settling the jurisdictional question.

Across the U.S., state courts are consistent in taking a different position.

Nevada called the contracts "indistinguishable" from gambling. New York AG Letitia James said "each contract is a bet.".

For now, Wisconsin’s suits add to a growing list of state challenges, each building a record that could ultimately force the Supreme Court of the United States to decide whether calling something a financial contract is enough to keep it from being treated as a bet.

This detailed match analysis covers key moments, player performances, and tactical insights.