Wisconsin defends sports betting ban in Seventh Circuit prediction market case

The brief asks the Seventh Circuit Court of Appeals in Chicago to uphold Wisconsin's gambling statute as applied to sports event contracts offered by Kalshi and other CFTC-regulated platforms. Wisconsin filed the brief on Wednesday 28 October, WLUK reported.

Wisconsin maintains its sports betting laws ban commodity trading websites such as Kalshi and CDNA, according to the filing. The state argues the federal government lacks power to preempt state gambling laws. It also argues that even if the contracts were swaps, the Commodity Exchange Act lets the state keep regulating sports betting in any form.

"Even if sports bets made on prediction markets were 'swaps,' the CEA still allows the State to continue its century-plus tradition of regulating sports betting in any form," Assistant Attorney General Colin Roth wrote.

The federal government also filed a brief on Wednesday, arguing the American Gaming Association should not be allowed to join the case.

How the case reached the Seventh Circuit

The CFTC sued Wisconsin and four other states. The agency argued that sports-related event contracts are swaps, a type of financial derivative regulated exclusively by federal commodities law, which preempts Wisconsin's gambling statutes as applied to such contracts. Wisconsin claimed the companies offering the contracts are facilitating sports betting, which is illegal gambling under state law.

Judge William Griesbach ruled against the CFTC on 29 July. The agency appealed to the Seventh Circuit. The case turns on whether the Commodity Exchange Act preempts Wisconsin's gambling statutes as applied to the contracts.

Prediction markets operate under a federal framework rather than state sportsbook licenses, Action Network reported. Kalshi became a CFTC-certified Designated Contract Market in 2020 and launched nationwide in July 2021, according to Sports Betting Dime.

Why the market matters

Sports betting is legal in some form in 39 states plus Washington, D.C. and Puerto Rico, according to Action Network. The American Gaming Association estimates US sports betting revenue reached $16.96bn in 2025, up 22.8% from a year earlier, on a handle of $166.94bn. State-regulated sportsbooks paid $3.71bn in taxes, up 32.4%.

DraftKings and FanDuel dominate that market. Through August 2026, they combined for 69.7% of tracked mobile handle and 70.5% of gross gaming revenue outside Nevada, Action Network reported. Fanatics ranked third by handle at 9.0%.

The federal government's response to Wisconsin's brief is due 19 November. No hearings have been scheduled.