Illegal sports betting; Wisconsin DOJ suing Kalshi, other platforms

MADISON, Wis. - A new lawsuit alleges big names are breaking Wisconsin law against sports betting. The state's attorney general takes aim at several companies.

What is a prediction market?

Big picture view:

They're called prediction markets and people place money on just about anything such as world events like the war in Iran, or politics, like who is going to win the White House in 2028, or sports, like who is going to win the World Cup.

Lawsuit filed over alleged illegal sports betting

What we know:

Wisconsin Attorney General Josh Kaul says that breaks Wisconsin's law against sports betting.

FREE DOWNLOAD: Get breaking news alerts in the FOX LOCAL Mobile app for iOS or Android

He's suing some of the big providers: Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates.

The platforms say it’s not a bet, but an "event contract." They say people aren’t gambling, but investing and trading shares.

The AG says no. He filed the civil lawsuit in Dane County. He asked a judge to declare these companies are breaking Wisconsin law and that they are a public nuisance and should be blocked from offering sports-related event contracts to Wisconsin customers.

What they're saying:

"No company is above this law. No matter how creatively, those companies try to disguise the activity that they're engaged in," said Wisconsin Attorney General Josh Kaul. "These companies have chosen to flout Wisconsin law by this, thinly disguising the sports betting that they facilitate through what are called event contracts. But our position in this case is that event contracts are no different than ordinary sports bets.

"We are taking action, to uphold Wisconsin law and, ultimately, seeking to shut down the sports gambling operations that we allege that those companies are engaging in Wisconsin," Kaul added.

Sports betting is illegal in Wisconsin except at tribal casinos.

This case isn't connected to the new law the governor signed. That law opens the door to online sports betting. But, the servers there need to be on tribal lands.

And before that—they need to re-negotiate their compacts, their treaties with the state, and the feds need to sign off.

Bucks star Giannis Antetokounmpo owns a share in one of the companies sued: Kalshi.

SIGN UP TODAY: Get daily headlines, breaking news emails from FOX6 News

Response

What they're saying:

Robinhood

"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." – Robinhood Spokesperson

Kalshi

"As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction. It's very different from what state-regulated sportsbooks and casinos offer their customers. We are confident in our legal arguments." — Kalshi

Coinbase

Congress was clear - consumers deserve uniform, federal oversight over derivatives markets. As the Third Circuit held, state enforcement that seeks to prohibit prediction markets - like Wisconsin's lawsuit today against Coinbase and others  - "is exactly the patchwork that Congress replaced wholecloth by creating the CFTC". Wisconsin should accept clear and consistent CFTC oversight of prediction markets  - just as Congress intended." — Coinbase Chief Legal Officer Paul Grewal

NewsWisconsinPolitics