Wisconsin has filed a civil complaint in Dane County Circuit Court accusing Kalshi, Robinhood, and Coinbase, along with affiliated subsidiaries, of operating what it describes as illegal sports betting through prediction markets and event contracts under state law.
The complaint opens by reaffirming the state’s gambling restrictions, stating: “Sports betting has long been illegal in Wisconsin, with exceptions only for certain Native American tribal gaming operations.”
It further alleges coordinated conduct among the companies: “Yet three companies—Kalshi, Robinhood, and Coinbase—are working together to facilitate illegal sports betting throughout the state.”
State alleges disguised sports wagering through “event contracts”
Wisconsin argues the platforms are effectively enabling sports wagering while rebranding it as financial trading. The complaint states: “Through their so-called ‘prediction markets,’ Kalshi, Robinhood, and Coinbase profit from Wisconsin residents placing bets on the outcome of sporting events, just like how ordinary casino sportsbooks profit from the bets people make there.”
The filing contends that the underlying structure mirrors traditional gambling products despite its financial-market framing.
College basketball betting used as key example
As part of its argument, Wisconsin cites specific examples from college athletics betting activity. The complaint notes:
For instance, Wisconsinites could use these companies’ services to place all kinds of bets on the recent NCAA college basketball tournament, including who would win the Final Four matchup between the University of Michigan and the University of Arizona, which team would cover the point spread, and even which team would first score ten points.”
The state argues these offerings demonstrate that the platforms are functionally indistinguishable from sportsbook-style wagering.
Allegation of “casino-style” mechanics behind trading language
The complaint also focuses on how the platforms generate revenue, stating: “And for every bet made, these companies collect a fee akin to a casino’s rake at a poker table.”
Wisconsin argues that this fee structure reinforces its claim that the companies are operating gambling services rather than neutral financial marketplaces.
The filing further claims the companies use financial terminology to mask gambling mechanics. It states: “Kalshi, Robinhood, and Coinbase use a fig leaf to disguise the casino-style sports betting they facilitate in Wisconsin.”
“They relabel their sports bets as ‘event contracts,’ meaning contracts traded between buyers and sellers at agreed-upon prices that mimic the odds of a sports-related outcome.”
Pricing structure tied to implied probabilities
Wisconsin also details how contract pricing reflects real-time probability estimates.
“As of April 3, 2026, traders could buy contracts taking the position that the University of Michigan would win its Final Four matchup with the University of Arizona for around $0.53, which reflected a roughly 53% projected chance of Michigan winning.”
It adds that payouts function in binary fashion: winning positions pay $1 per contract, while losing positions expire worthless, mirroring traditional betting outcomes.
Broader legal pressure on prediction markets
Separately, prediction market operators are facing increasing regulatory scrutiny across multiple jurisdictions. In New York, regulators and prosecutors have pursued actions involving Coinbase and Gemini over compliance and consumer protection concerns tied to trading products.
Kalshi is also engaged in ongoing litigation, including an injunction request in Montana seeking to block state-level restrictions on its contracts, while an Arizona court is handling procedural disputes in a separate challenge involving the classification of event contracts.
Wisconsin seeks injunction and legal classification
Wisconsin is asking the court to halt the companies from offering sports-related event contracts within the state, declare the activity unlawful under gambling statutes, and classify it as a public nuisance requiring immediate relief.
Featured image: Kenneth C. Zirkel, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons