The Commodity Futures Trading Commission filed a lawsuit Tuesday against Wisconsin state officials, challenging the state's recent regulatory enforcement actions against prediction market platforms.

The federal lawsuit targets Wisconsin's crackdown on five prediction market companies: Coinbase, Kalshi, Robinhood, Polymarket and Crypto.com. Wisconsin had sued these platforms, alleging they were operating illegal gambling operations within the state.

The CFTC argues that federal law grants the commission exclusive jurisdiction over prediction markets and commodity derivatives trading, making Wisconsin's enforcement actions an overreach of state authority. The case highlights a broader regulatory dispute over which level of government has the authority to oversee these emerging financial platforms.

Prediction markets allow users to bet on the outcomes of future events, including political elections, economic indicators, and other real-world occurrences. The platforms have grown in popularity but face uncertain regulatory treatment across different jurisdictions.

Meanwhile, Polymarket, one of the platforms named in Wisconsin's lawsuit, has separately approached the CFTC seeking approval to bring its main exchange operations back to the United States. The company currently operates its primary services outside the U.S. due to regulatory restrictions.

The outcome of the federal lawsuit could establish important precedents for how prediction markets are regulated and whether states can independently enforce restrictions on these platforms when federal oversight exists.