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(AsiaGameHub) –   Wisconsin has become the newest state to initiate legal action against prominent prediction market platforms—including Polymarket, Kalshi, Coinbase, Crypto.com, and Robinhood—following the passage of legislation to launch legal online sports betting in the state.

The lawsuit claims these companies are already providing Wisconsin residents with the opportunity to place online sports wagers.

“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 legal filings seek both preliminary and permanent injunctions to prevent the companies from offering sports-related event contracts in Wisconsin.

Sports Event Contracts Are ‘Indistinguishable’ From Regular Sports Betting

Per the lawsuits, sports event contracts available on the five platforms are “indistinguishable from an ordinary sports bet,” as defined by Wisconsin’s law.

Under Wisconsin law, gambling is defined as an activity that includes all three of the following components:

1. Consideration (you pay or put something of value at risk)
2. Chance (the outcome relies on luck rather than skill)
3. Prize (you have the opportunity to win something of value)

Any activity with all three components is legally classified as gambling in Wisconsin. According to the complaint, users trading on markets for events like NCAA basketball matches meet these three criteria.

The ongoing debate over whether prediction markets qualify as gambling remains fierce. Proponents of these markets argue they are distinct from sports betting because platforms do not set odds or profit when users lose.

The lawsuit acknowledges that unlike sportsbooks, the companies aren’t always on the other side of wagers, but adds: “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.”

The complaint makes the same allegation against Polymarket, even though the company doesn’t charge fees except on a limited number of cryptocurrency markets. For now, it has adopted a growth-first, profits-later strategy and is currently seeking an additional $400 million in funding at a valuation of $15 billion.

Wisconsin Approves Legal Online Sports Betting

Last month, Wisconsin lawmakers passed a bill allowing the state’s tribes to launch online sports betting. Governor Tony Evers signed the legislation into law on April 10.

Sen. Kristin Dassler-Alfheim, one of the bill’s co-sponsors, said she supported legalization as a way to regulate 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.”

Is Legalization the Catalyst for the Lawsuit?

“Except in limited circumstances, sports betting and other forms of commercial gambling have long been illegal in Wisconsin,” the press release stated.

Yet, the state has only taken this action in the wake of legalizing online sports betting—presumably because sports event contracts are now seen as a threat to the revenue mentioned by Dassler-Alfheim.

State regulators that receive direct revenue from sports betting, such as Arizona and Nevada, have also been notably aggressive in taking action against prediction markets.

States have generally struggled to secure judgments against these platforms, with only Nevada managing to block Kalshi so far. The lawsuit cites that the companies are violating Wisconsin state law, but the platforms will likely argue that federal laws preempt states from having authority over their actions.