Wisconsin is the latest state to file a lawsuit against major prediction market platforms, including Polymarket, Kalshi, Coinbase, Crypto.com, and Robinhood. The action comes after the state passed legislation to launch legal online sports betting.
The lawsuit alleges the companies are already offering residents the chance to wager on sports online.
“Thinly disguising unlawful conduct doesn’t make it lawful,” said Attorney General Josh Kaul in a press release. “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”
The lawsuits request preliminary and permanent injunctions to prevent the companies from offering sports-related event contracts in Wisconsin.
Event Contracts ‘Indistinguishable’ From Sports Betting
According to the lawsuits, sports event contracts available at the five platforms are “indistinguishable from an ordinary sports bet,” as defined by Wisconsin’s law.
Under Wisconsin law, gambling occurs when all three of these elements are present:
- Consideration (you pay or risk something of value)
- Chance (the outcome depends on luck, not skill)
- Prize (you can win something of value)
If an activity has all three, it is legally considered gambling in Wisconsin. Users trading on markets such as NCAA basketball matches are satisfying these three elements, according to the complaint.
The debate over whether prediction markets are gambling continues to rage. Proponents of the markets argue that they are distinct from sports betting as platforms do not set odds or profit when users lose.
The lawsuit admits that the companies are not always on the other side of the wagers like sportsbooks, “But that does not get them off the hook, since each company still generates significant revenue from these sports bets by charging transaction fees each time event contracts are traded using their platforms.”
It alleges the same for Polymarket, although the company does not actually charge fees except on a limited number of cryptocurrency markets. For now, it has adopted a growth-first, profits-later philosophy. The company is currently seeking a further $400 million in funding at a valuation of $15 billion.
Wisconsin Legalizes Online Sports Betting
Wisconsin lawmakers approved a bill last month that will allow the state’s tribes to launch online sports betting. Governor Tony Evers signed off on the legislation on April 10.
Sen. Kristin Dassler-Alfheim, one of the bill’s co-sponsors, said she supported legalization as a way to control the already existing online gambling market.
“It already exists on the edges, behind closed doors. It’s already there,” Dassler-Alfheim said. “And it’s already being abused by some, and that’s not going to change. I would rather us put as many parameters around it as we can to take care of our consumers and keep the revenue.”
Did Legalization Prompt Lawsuit?
“Except in limited circumstances, sports betting and other forms of commercial gambling have long been illegal in Wisconsin,” stated the press release.
However, it is only in the wake of legalizing online sports betting that the state has taken action. Presumably, as sports event contracts are now seen as a threat to the revenue mentioned by Dassler-Alfheim.
State regulators that receive direct revenues from sports betting, such as Arizona and Nevada, have also been noticeable in taking strong action against prediction markets.
States have generally struggled to secure judgments against platforms, with only Nevada managing to block Kalshi thus far. The lawsuit only cites that the companies are violating Wisconsin state law, but they will argue that federal laws preempt states from having authority over their actions.
The post Wisconsin Sues Prediction Market Platforms After Legalizing Online Sports Betting appeared first on CasinoBeats.
Wisconsin is the latest state to file a lawsuit against major prediction market platforms, including Polymarket, Kalshi, Coinbase, Crypto.com, and Robinhood. The action comes after the state passed legislation to launch legal online sports betting. The lawsuit alleges the companies are already offering residents the chance to wager on sports online. “Thinly disguising unlawful conduct
The post Wisconsin Sues Prediction Market Platforms After Legalizing Online Sports Betting appeared first on CasinoBeats.