Coinbase Hit With Second State Lawsuit In 48 Hours As Wisconsin Joins Prediction Market Crackdown

Coinbase (NASDAQ:COIN) is now facing state lawsuits on two fronts in the same week over its sports prediction market offering, after Wisconsin filed suit Thursday.

Wisconsin Attorney General Josh Kaul brought three complaints in Dane County, targeting Coinbase alongside Kalshi, Robinhood (NASDAQ:HOOD), Polymarket and Crypto.com. The state alleges the platforms’ event contracts are unlicensed gambling dressed up as financial products.

“Thinly disguising unlawful conduct doesn’t make it lawful,” Kaul said.

The complaints cite NCAA tournament markets, point-spread contracts and first-to-ten-points bets, with platforms collecting a fee on each trade. Crypto.com is called out for charging $0.02 per $1 contract.

Wisconsin wants injunctions blocking the companies from serving state residents, but is not trying to void existing positions.

Coinbase’s Bad Week Gets Worse

The Wisconsin filing lands 48 hours after New York Attorney General Letitia James sued Coinbase and Gemini (NASDAQ:GEMI) over the same conduct, seeking forfeiture of all prediction market profits, triple that figure in civil penalties, and a marketing ban on college campuses. COIN fell roughly 5% on the New York news.

Coinbase and Robinhood route their prediction market orders to Kalshi, making the public companies a natural target for state attorneys general.

Tennessee, Nevada, Maryland, Massachusetts, Ohio, Arizona, Connecticut and Illinois are already fighting the industry in court over whether prediction markets count as illegal gambling, with rulings split roughly down the middle.

Selig’s Federal Shield Is Getting Tested

CFTC Chairman Mike Selig, a Trump nominee running the agency as its lone commissioner, has built his tenure around defending prediction markets. He called event contracts “exciting products” in his first public remarks and scrapped a Biden-era rule that would have restricted them.

In February, Selig warned he would “see you in court” if states kept moving against Kalshi. On April 2, he followed through, with the CFTC and DOJ jointly suing Arizona, Connecticut and Illinois, an action described by legal observers as unprecedented.

President Donald Trump, whose son advises Kalshi, said Thursday he is “not happy” with the sector after an Army soldier was charged with turning $33,000 into $409,000 on Polymarket using classified intel.

In other insider trading news, Virginia Senate candidate and former “FBoy Island” contestant Mark Moran was banned from the platform this week and fined $6,300 for betting on his own race, telling followers he “wanted to get caught.”

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