Wisconsin lawmaker warns prediction markets will launch even if sports betting is not approved

Charlotte Capewell

19 November 2025 at 8:28am UTC-5

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Wisconsin Representative Tyler August has warned that prediction markets will fill the void of sports wagering if a law is not passed allowing the state’s 11 tribes to offer sports wagering.

The proposal, which will be voted on by lawmakers today, will also need to be approved by the state senate.

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Governor of Wisconsin, Tony Evers, has already indicated he will support action that keeps gambling with the tribes.

The new legislation, bill AB 601, seeks to redefine legal betting so that mobile wagering is permitted if the user is within Wisconsin and the sportsbook’s servers are located on tribal land.

August believes the new bill will help keep revenue within state borders. He said the bill “channels activity into a regulated, Wisconsin-based, compacted environment with clear jurisdiction and accountability. This protects consumers, respects tribal sovereignty, and keeps revenue tied to Wisconsin operations rather than flowing to unaligned national apps.”

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Prediction markets have gained significant popularity nationwide, capitalizing on a loophole that enables customers to place bets through event contracts without requiring state gambling licenses.

As the Ho-Chunk Nation and others prepare lawsuits against Kalshi for circumventing gambling laws, August believes the best course of action is to keep “wagering inside Wisconsin’s compact system.”

Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.

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The Backstory

Why Wisconsin’s debate matters now

Wisconsin’s push to redefine a “bet” and authorize mobile wagering through tribal servers comes amid a national clash over what counts as sports betting and who gets to regulate it. Around the country, prediction markets have rushed into gray space by treating wagers as federally supervised event contracts. That has triggered state crackdowns, lawsuits and new federal-facing strategies by market entrants, raising the stakes for any state that hesitates on a clear, regulated path for sports wagering.

In recent months, regulators in other states have warned that unlicensed platforms offering event contracts pose consumer and integrity risks while siphoning tax revenue from regulated books. The debate is no longer theoretical: companies are actively listing sports outcomes and other events as tradable contracts, testing the boundaries of state and federal oversight. Wisconsin’s tribes, compact system and server-location approach fit into a broader pattern of states trying to keep wagering inside established regimes rather than ceding ground to exchanges that operate under a different rulebook.

States push back on prediction markets

Michigan was among the first to say the quiet part out loud. The Michigan Gaming Control Board opened an inquiry into unlicensed sports prediction markets it says are operating unlawfully, warning that such platforms undercut the state’s regulated industry while exposing residents to fraud and weak data safeguards. The regulator emphasized that licensed sportsbooks are bound by age checks, know-your-customer protocols, anti-money-laundering rules and self-exclusion programs—guardrails it says are often missing on exchanges that frame wagers as financial contracts. Michigan’s message was blunt: “Sports betting is meant to be a form of entertainment, not a financial investment,” the agency said as it began its probe into unlicensed prediction markets.

Nevada followed with a directive that erased any ambiguity for its own licensees. In a notice to operators, the Nevada Gaming Control Board said sports and event contracts are wagers under state law—even when listed on exchanges overseen by the Commodity Futures Trading Commission. The warning carried teeth: only nonrestricted licensees with sports-pool approval may offer such products in Nevada, and partnerships with unauthorized event-contract firms could trigger disciplinary action or suitability questions under the Gaming Control Act. The board’s stance also echoed concerns in Pennsylvania, where the gaming control board’s executive director urged lawmakers to press federal regulators about the growth of sports prediction markets. Nevada’s line in the sand was clear in its notice to licensees on event contracts.

A federal-versus-state collision course

The heart of the fight is jurisdiction. Prediction market operators argue their contracts are swaps regulated by the CFTC, not sports betting under state law. That claim is now in court. Kalshi, a leading exchange, sued the Maryland Lottery and Gaming Control Commission after receiving a cease-and-desist order, arguing Maryland’s action conflicts with federal authority over futures on designated exchanges. Kalshi sought a preliminary injunction and said the state’s attempt to regulate the platform is both field-preempted and conflict-preempted. The case follows a recent temporary injunction Kalshi won against Nevada’s regulator, which a judge said could clarify the legal model further. The legal test of preemption and definitional boundaries is laid out in Kalshi’s lawsuit against Maryland’s regulator.

The outcome matters well beyond a single platform. If courts validate the view that event contracts on designated contract markets fall principally under federal commodities oversight, other states’ ability to police sports-like markets could be blunted. If, on the other hand, states prevail in classifying most event contracts tied to competitive outcomes as sports wagers requiring local licensure, prediction markets will need state-by-state authorization or risk enforcement. Wisconsin’s proposal to root mobile bets on tribal land through server location shows one way state policymakers are trying to reconcile modern distribution with jurisdictional control.

Crypto and Wall Street circle event contracts

The regulatory gray zone has not deterred capital. Crypto exchange Kraken agreed to buy Small Exchange, a CFTC-licensed designated contract market, in a $100 million deal that sets up a fully U.S. native derivatives platform and signals plans to enter prediction markets. The company said the acquisition provides the regulatory backbone for spot, futures and margin products, and a spokesperson confirmed interest in event markets. Kraken’s move arrives as other firms try to leverage federal pathways: PrizePicks pursued National Futures Association approval through a subsidiary, and RSBIX revived a bid to become a designated contract market with plans to list sports event contracts. The strategic turn toward federal licensure and exchange models is detailed in Kraken’s acquisition of CFTC-licensed Small Exchange.

These maneuvers intensify the pressure on states to define the line between betting and derivatives. Operators chasing a national footprint view federal designation as a scalable solution. State regulators, by contrast, point to consumer protections, suitability vetting and tax collection as reasons to keep sports outcomes within the boundaries of gaming law. The more capital flows into CFTC-facing platforms, the harder it becomes for states to rely on warning notices alone.

Regulated books expand while gaps persist

Simultaneously, the regulated sports betting ecosystem in the U.S. continues to widen in conventional ways. Suppliers such as Beter are securing approvals to bring esports and niche sports content to market through licensed books. Beter won a vendor minor license in Colorado after entering New Jersey earlier in the year, opening the door to its ESportsBattle tournaments and Setka Cup table tennis through a partnership with Bet365. The company touts integrity monitoring and data services around roughly 700,000 events annually—features regulators emphasize when contrasting licensed sportsbooks with unlicensed exchanges. The supplier’s progress illustrates how content can expand under state rules, as seen in Beter’s vendor approval in Colorado.

Yet even as regulated channels grow, gaps remain where prediction markets can attract users with faster listings and novel contract structures. That dynamic fuels lawmakers’ urgency: if a state delays authorizing and defining mobile wagering, exchange models can capture demand with products that look and feel like sports bets but claim different regulatory treatment. For tribal-gaming states, the risk is twofold—erosion of compact-controlled revenue and consumer migration to platforms with fewer safeguards.

The trajectory across states suggests that clarity, not coexistence by ambiguity, is the likely endgame. Michigan is building a record for enforcement. Nevada has told its licensees to steer clear of unauthorized event contracts. Maryland is testing the courts’ tolerance for state intervention against a federally supervised exchange. Meanwhile, federally anchored players are amassing infrastructure to list more contracts, not fewer. Against that backdrop, Wisconsin’s choice—whether to anchor mobile betting within tribal frameworks or leave room for workarounds—will determine not only where dollars flow but who writes the rules for sports-like wagers in the state.