Companies Push Back On Wisconsin Lawsuit Over Sports Event Contracts

MADISON, WI — Companies named in Wisconsin’s lawsuit over sports-related “event contracts” are pushing back, arguing their platforms are federally regulated, not illegal gambling.

The Wisconsin Department of Justice filed lawsuits Thursday against Robinhood, Coinbase, and others alleging the companies are facilitating illegal sports betting in Wisconsin.

A spokesperson for Robinhood said its event contracts are “federally regulated by the CFTC” and offered through a registered entity.

Coinbase Chief Legal Officer Paul Grewal made a similar argument, saying the lawsuit conflicts with federal oversight of derivatives markets.

“Congress was clear — consumers deserve uniform, federal oversight over derivatives markets,” Grewal said. He added that state-level enforcement creates “exactly the patchwork that Congress replaced” by establishing the Commodity Futures Trading Commission.

The state’s lawsuits, filed in Dane County, seek to block the companies from offering sports-related event contracts to Wisconsin users. Officials argue the products function like traditional sports bets, paying out based on the outcome of games.

Wisconsin Attorney General Josh Kaul said the platforms are disguising unlawful gambling activity.

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

The companies, however, are leaning on a different legal argument, that their products fall under federal jurisdiction.