The American Gaming Association (AGA) is seeking to become involved in a lawsuit that pits the Commodity Futures Trading Commission (CFTC) against Wisconsin. On Tuesday, the AGA submitted a motion to the U.S. District Court for the Eastern District of Wisconsin, aiming to intervene as a defendant in the legal action concerning sports event contracts.
This move comes as the AGA seeks to align with Wisconsin and State Attorney General Joshua Kaul in a case initiated by the CFTC, which was filed in late April. The federal agency is suing Wisconsin and Kaul following the state Department of Justice's civil lawsuits against various prediction markets accused of facilitating illegal sports wagering by offering sports event contracts. The platforms named in the lawsuits are Coinbase, Crypto.com, Kalshi, Polymarket, and Robinhood.
In its legal action, Wisconsin seeks both preliminary and permanent injunctions to halt these providers from operating within the state.
The CFTC responded to Wisconsin’s lawsuit with a suit of its own, asking the court to affirm that the state's actions against the prediction markets contravene the Constitution and violate the Supremacy Clause. The agency is also pursuing a permanent injunction against Kaul and other state officials, a request that may now include the AGA due to its recent motion to intervene in this complicated legal matter surrounding sports event contracts.
The CFTC asserts its regulatory authority over prediction markets and related activities, a claim that the AGA disputes in its motion. The AGA argues that this new regulatory assertion poses serious risks to those in the gaming industry. The motion states, "The United States of America and the Commodity Futures Trading Commission ask this court to grant the CFTC sweeping and novel authority that Congress never authorized: the right to serve as the nation’s sports betting regulator."
It further states, "For the American Gaming Association and its members—which include commercial and tribal casino operators, suppliers, and sports betting operators across the country—that issue is not an abstract question of regulatory jurisdiction. It directly threatens their core economic interests."
The motion elaborates on the potential consequences if the CFTC were to regulate sports event contracts independently of state gaming licenses. AGA members contend they have a significant stake in the outcome of this litigation and are subject to rigorous regulatory frameworks. They are required to obtain licenses, adhere to strict regulations, and pay substantial taxes and operational fees, leading the AGA to note that a federal ruling could give unlicensed prediction markets an unfair advantage, harming those who comply with the established regulatory processes.
Wisconsin officials have agreed to the AGA's motion, but the CFTC has expressed opposition to the trade association joining the dispute.
Interestingly, the AGA's intervention echoes a strategy the CFTC previously employed. Earlier this year, the CFTC submitted an amicus brief in a case involving Crypto.com in the U.S. Court of Appeals for the Ninth Circuit, reinforcing its claim of exclusive jurisdiction over prediction markets. The agency had also filed a similar brief with the Massachusetts Supreme Judicial Court.
CFTC Chairman Michael Selig emphasized the agency's position, stating, "Some states continue to pursue ever-escalating, illegal enforcement actions against CFTC-regulated exchanges, despite rulings from multiple courts halting those efforts. Congress has entrusted the CFTC with the sole authority to regulate commodity derivatives markets, including prediction markets. To any state that seeks to nullify federal law and seize authority over these markets, I say again: we will see you in court."
This follow-up came after a judge upheld a decision that granted Massachusetts a preliminary injunction against Kalshi, supported by various government officials, including New York AG Letitia James, who submitted an amicus brief backing the judicial decision.
