Federal Judge William C. Griesbach simultaneously denied a series of motions in USA, et al. v. State of Wisconsin, et al. on Wednesday, the most prominent of which was the Commodity Futures Trading Commission’s request for a preliminary injunction blocking Wisconsin officials’ attempts to enforce state gambling laws against prediction market exchange operators. Those efforts will continue at this time, involving a lawsuit in the Wisconsin federal court district that Griesbach does not preside in.
USA v. Wisconsin will move forward after Griesbach also denied Wisconsin’s motion to dismiss the case. Griesbach’s decision to also deny a request to change the venue of that case could complicate the situation for Wisconsin authorities in the future.
Griesbach denies multiple motions in CFTC case against Wisconsin
Griesbach’s July 29 order found fault with the Commodity Futures Trading Commission’s (CFTC) motion for a venue change to the US District Court for the Western District of Wisconsin, the state’s motion to dismiss the CFTC’s case against it, and the CFTC’s motion for a preliminary injunction. For that reason, the status quo remains; Griesbach will continue to preside in the case in the Eastern District of Wisconsin, the case will proceed to trial, and Wisconsin officials will continue to pursue legal action against Kalshi and other prediction market exchange operators.
The CFTC sued Wisconsin in late April. That action came mere days after Wisconsin Attorney General Josh Kaul sued a quartet of operators in state court, alleging that the sports event contracts on their platforms violate the state’s gambling laws.
Griesbach’s denial of the CFTC’s motion for injunctive relief means that action can continue as well, pending the CFTC’s appeal to the US Eighth Circuit Court of Appeals. Wisconsin v. Kalshi, et al. has been removed to federal court in the Western District of Wisconsin although Kaul’s office has asked that court to remand the case back to state court.
The Western District of Wisconsin is also where the CFTC asked Griesbach to send USA v. Wisconsin. With that possibility in the past, the path forward for Wisconsin officials could get complicated.
Eighth Circuit is the inevitable destination for both lawsuits
There are a number of possibilities that become more complicated considering that judges in both the Eastern and Western districts of Wisconsin are considering similar questions, making it more likely that the Eight Circuit will become the true arbiter of these disputes. The CFTC, exchanges like Kalshi, and Wisconsin officials can consider rulings in both courts merely precursors to the action before the Eighth.
One possibility is that the Western District of Wisconsin will deny the state’s motion to enjoin prediction market exchanges from offering sports event contracts, resulting in an appeal from the state to the Eighth separately from the CFTC’s forthcoming appeal in USA v. Wisconsin. In that event, the Eighth would be considering one ruling favorable to Wisconsin’s interests and another favorable to the interests of exchanges.
Regardless of how Wisconsin v. Kalshi proceeds at this point, it will represent a separate matter, as Griesbach denied the request of several exchange operators to intervene in USA v. Wisconsin. That means it will likely be many more months before the Eighth Circuit gives clear answers with a degree of permanence to the CFTC, exchange operators, and state officials in terms of the legality of sports event contracts in Wisconsin.
