MILWAUKEE (CN) - Wisconsin Attorney General Josh Kaul filed a lawsuit Thursday claiming several prediction market websites have been running illegal sports betting operations in the state.

"Thinly disguising unlawful conduct doesn't make it lawful," Kaul said in a statement. "These companies' alleged facilitation of sports betting in Wisconsin should be shut down."

The state wants a judge to order Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com and their affiliates to halt any facilitation of illegal sports betting in the Dairy State.

Through their prediction markets, the defendant platforms offer "event contracts" or contracts traded between buyers and sellers at agreed-upon prices that mimic the odds of sports-related outcome, the state says.

"Kalshi, Robinhood and Coinbase use a fig leaf to disguise the casino-style sports betting they facilitate in Wisconsin," Kaul says in the 38-page complaint. Parties to these 'event contracts' wager money on whether a given sports-related outcome will occur, just as when people bet on that same outcome using traditional casino-style sportsbooks."

Earlier this month, Governor Tony Evers signed a law to legalize online event and sports betting run by Native American tribes. But Kaul claims event contracts and sports gambling are indistinguishable and illegal in Wisconsin.

The law requires the server or device used to conduct the wager be constructed on tribal land and aligned with tribal gaming compacts by adding an exception to the legal definition of "bet" to allow for digital bets made within the physical borders of Wisconsin.

Tribal nations can now take steps toward negotiating with each other, with the state and with betting platforms to create a plan that benefits all 11 federally recognized tribes equally.

By repeatedly violating Wisconsin sports betting regulations, Kaul charges that the defendant platforms are public nuisances.

The Ho-Chunk Nation is also embroiled in a similar lawsuit against Kalshi and Robinhood filed in August 2025 in the Western District of Wisconsin.

The tribe claims the online markets are engaging in illegal sports gambling on Indian lands by allowing users to choose "yes" or "no" to the outcomes of sporting events.

Kalshi offers a prediction market, where it says users can buy and sell contracts on the outcome of events. These event contracts are regulated by the Commodity Exchange Act, which prohibits any contract related to terrorism, assassination, war and gaming.

However, it has a loophole for event contracts that serve a commercial purpose or those not used solely for gambling. Kalshi claims the site has nothing to do with gambling, but it is an online platform where users "trade on the outcome of real-world events."

The court has not indicated when it will rule on Kalshi's motion to dismiss or the tribe's motion for preliminary injunction in that case.

Thursday's suit adds to similar cases around the country as states grapple with the new frontier of betting.

The Third Circuit this month blocked states from regulating Kalshi's prediction markets, handing exclusive regulation of the industry to a single federal agency. A Ninth Circuit panel is considering the difference between sports betting and casino gambling, and who should control it.

The defendants in the Wisconsin suit collect a fee for every bet placed and earning money breaking Wisconsin law, according to Kaul. He compared the fee to operators of illicit poker games taking a cut of each pot.

Kaul said Kalshi makes around $1.3 billion every year on its prediction market, at least 90% of its annual revenue.  While he didn't reject the possibility of monetary damages, he said that isn't the point.

"The primary focus is on shutting down the activity we allege is unlawful sports betting facilitated by these defendants," Kaul said. "If we think there's an adequate legal basis to seek relief, we aren't foreclosing that, but right now our focus is on shutting down [unlawful] activity."

Source: Courthouse News Service