Wisconsin Sues Several Prediction Market Companies For Illegal Sports Betting

• The Wisconsin Department of Justice on Thursday announced several lawsuits against prediction market companies for illegal sports betting
• The department levied lawsuits against Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates
• The department requests preliminary and permanent injunctions against the companies

The Wisconsin Department of Justice has levied lawsuits against Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates alleging engagement in illegal sports betting operations in the Badger State.

The Department of Justice (DOJ) filed lawsuits against the prediction market companies in the State of Wisconsin Circuit Court Dane County to halt “alleged facilitation of illegal sports betting, a form of unlawful commercial gambling, in Wisconsin,” according to a department release.

“Thinly disguising unlawful conduct doesn’t make it lawful,” Wisconsin Attorney General Josh Kaul said in a released statement. “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”

Wisconsin Bans Most Gambling Outside of Tribal Operations

According to the filed lawsuits, Wisconsin has banned most forms of betting in the state outside of tribal gaming operations. The prediction market companies facilitate sports betting through their event contract trading platforms, DOJ counsel wrote in its lawsuit, which pay out as ordinary bets based on the odds of sports-related outcomes.

The lawsuits allege the companies collect a fee for every bet made on the platform, which results in generated revenue from Wisconsinites by violating the state’s gambling laws.

By marking money from these sports event contracts, DOJ counsel alleges the companies are engaging in unlawful gambling activity in the state.

“In short, Defendants make money from the illegal betting they facilitate, just like the operator of an illicit poker game who takes a cut of each pot. By making money from illegal sports betting, these companies are each engaging in criminal gambling activity under Wis. Stat. § 945.03(1m). These ongoing, repeated criminal violations represent a public nuisance that should be abated immediately,” DOJ counsel noted in its lawsuits.

The Wisconsin DOJ is requesting a preliminary and permanent injunction enjoining and restraining the defendants from making sports-related event contracts available for trading in Wisconsin.

A Robinhood spokesperson told Sports Betting Dime the company intends to defend itself against the claims of illegal sports betting in the state.

“As we’ve previously shared, Robinhood’s event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner. We intend to defend ourselves against these claims,” the Robinhood spokesperson said.

Kalshi declined to comment on the lawsuit.

Requests for comment to Crypto.com, Polymarket, and Coinbase were not returned.

Latest Prediction Market Lawsuit

This is the second lawsuit levied against Coinbase this week. New York Attorney General Letitia James this week filed lawsuits against both Coinbase Financial Markets and Gemini, Titan LLC, alleging the prediction market companies engaged in unlicensed gambling in the state.

The lawsuits come just two months after James issued a warning to the New York sports betting industry and consumers to steer clear of prediction markets offering event contracts centered around sports, politics, and entertainment.

The lawsuits allege both Coinbase and Gemini offers users the ability bet on events, including sports, entertainment, and elections, without a license and in violation of New York gaming laws.