Prediction Markets
in Wisconsin
Wisconsin is the only US state where the Attorney General has filed a civil lawsuit directly against prediction market platforms as of May 2026. The lawsuit argues that event contracts require Wisconsin gaming licenses, challenging the federal CFTC preemption doctrine. Kalshi continues to operate in Wisconsin pending litigation. This is the most legally active prediction market battleground in the US in 2026.
Which platforms are available in Wisconsin?
| Platform | Status in WI | Notes |
|---|---|---|
| Kalshi | Available | CFTC-regulated DCM: federal preemption applies. Kalshi continues to operate in WI despite the civil lawsuit. Monitor developments. |
| Polymarket | Waitlist | QCEX invite-only. Wisconsin has not specifically blocked QCEX, but the civil lawsuit creates elevated risk for all platforms. |
| Manifold | Available | Play-money and sweepstakes cash available in Wisconsin. |
| PredictIt | Available | CFTC no-action exemption. Politics-only, $850 per contract cap. Available in WI. |
| Robinhood | Available | Economic and sports event contracts available. Subject to ongoing litigation risk. |
The Wisconsin civil lawsuit — most active litigation in 2026
The AG's theory of the case
Wisconsin's Attorney General filed a civil lawsuit in May 2026 against prediction market operators, arguing that event contracts on sports, political, and economic outcomes constitute "gambling" under Wisconsin Statute §945.02, which prohibits operating gambling businesses without state licensing. The AG's position is that the CFTC's federal preemption doctrine is insufficient to override Wisconsin's police powers over gambling: an argument that directly conflicts with the October 2024 federal court injunction that held in Kalshi's favor against Nevada.
The lawsuit is notable for being a civil enforcement action (not merely an executive order or regulatory inquiry) filed by a state attorney general: a more legally forceful step than the executive orders issued by New York's Hochul and Illinois's Pritzker. Wisconsin is testing whether state courts, operating outside the Ninth Circuit's jurisdiction that covered the Nevada case, will reach a different conclusion on CFTC preemption.
Kalshi's response and current status
Kalshi has stated publicly that its CFTC DCM designation preempts Wisconsin gaming law and that it intends to continue operating in Wisconsin pending the outcome of litigation. The CFTC has not yet intervened directly in the Wisconsin case, though CFTC preemption is expected to be a central defense argument. The case is expected to take 12–24 months to reach a substantive ruling.
- Kalshi: Currently operating in WI. The lawsuit does not prevent residents from using Kalshi today: it's a civil case, not an injunction against users. Monitor developments as the case proceeds.
- Non-CFTC platforms: The AG lawsuit increases risk for platforms without federal preemption arguments. Consider limiting exposure to CFTC-regulated platforms (Kalshi, IBKR/ForecastEx) in Wisconsin during the litigation period.
- The precedent risk: If Wisconsin prevails, it would be the first state-court ruling that CFTC preemption does not cover prediction markets: a major development that would create a circuit split and likely reach the US Supreme Court eventually.
- Consult a Wisconsin attorney before deploying significant capital on non-CFTC platforms in this state.
Key regulatory events affecting Wisconsin
Wisconsin prediction market tax rates
Wisconsin has a graduated income tax with four brackets (3.54%, 4.65%, 5.3%, 7.65%). Most traders earning moderate prediction market profits will land in the 5.3% bracket. The top rate of 7.65% applies to income above approximately $374,000. This is a moderate state tax burden: higher than Illinois's 4.95% flat rate but lower than New York's 10.9% top rate.
Event contract profits are ordinary income for Wisconsin state tax purposes. 1099-MISC from Kalshi. Note that Wisconsin's civil lawsuit against prediction market platforms creates some uncertainty: if Wisconsin prevails and platforms exit the state, any in-progress trades would need to be resolved or transferred.
Other states
New York
Executive order + Polymarket blocked. NY has the most aggressive financial regulator but no civil lawsuit yet: Wisconsin went further.
Caution · ILIllinois
Pritzker executive order: similar political posture to Wisconsin AG, but via executive order not civil lawsuit.
Open · MNMinnesota
Wisconsin's neighbor: no enforcement actions, full platform access, 9.85% top state income tax rate.