AGA Seeks to Join CFTC's Legal Battle Over Prediction Markets

The American Gaming Association (AGA) has moved to join the growing legal dispute between the Commodity Futures Trading Commission (CFTC) and the state of Wisconsin, arguing that the outcome could reshape the future of sports betting and prediction markets across the United States.

In a motion filed with the U.S. District Court for the Eastern District of Wisconsin, the AGA requested permission to intervene as a defendant alongside Wisconsin Attorney General Joshua Kaul, as the CFTC challenges the state's efforts to block sports event contracts offered by federally regulated prediction market platforms.

AGA Says Prediction Markets Bypass State Gaming Laws

At the center of the dispute is whether sports event contracts should be regulated as financial derivatives under federal law or treated as sports betting under state gaming regulations.

The AGA argues that prediction market operators are effectively offering sports wagering without obtaining the licenses, paying the taxes, or complying with the regulatory requirements imposed on licensed sportsbooks.

In its filing, the association warned that allowing federally regulated exchanges to offer sports event contracts without state oversight would create an uneven playing field for commercial and tribal gaming operators that have invested heavily in meeting state licensing requirements.

The organization also rejected the CFTC's position that Congress intended the agency to serve as the nation's regulator for sports-related event contracts.

Wisconsin and the CFTC Remain at Odds

The case stems from legal action Wisconsin filed earlier this year against several prediction market operators, including Kalshi, Crypto.com, Polymarket, Robinhood, and Coinbase, seeking to stop them from offering sports event contracts within the state.

The CFTC responded by filing its own federal lawsuit, arguing that Wisconsin's enforcement efforts violate the Supremacy Clause because Congress granted the agency exclusive authority to regulate commodity derivatives markets, including prediction markets.

The federal regulator is seeking a permanent injunction that would prevent Wisconsin officials from enforcing state gambling laws against CFTC-regulated exchanges.

The CFTC has opposed the AGA's request to join the lawsuit, while Wisconsin officials have backed the association's motion.

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Prediction Markets Face Growing Legal Challenges

The Wisconsin case is the latest chapter in an expanding legal battle over prediction markets.

The CFTC has increasingly stepped into state-level disputes, filing lawsuits and amicus briefs to defend its authority over sports event contracts in jurisdictions including Arizona, Massachusetts, and the Ninth Circuit Court of Appeals. The agency maintains that federally regulated exchanges should not be subject to conflicting state gambling laws.

For the AGA, however, the case extends beyond regulatory jurisdiction. The organization argues that the rapid growth of prediction markets could fundamentally alter the competitive landscape for licensed sportsbooks if platforms are allowed to offer sports event contracts without complying with the same state licensing and taxation framework.

As more states challenge prediction markets and federal regulators continue defending them, the Wisconsin lawsuit is shaping up to be one of the industry's most significant legal tests.

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