CFTC sues Rhode Island over actions against prediction markets

The Commodity Futures Trading Commission announced it was suing Rhode Island on Thursday, one week after the state took action against two prediction market platforms. 

It marks the seventh state the CFTC has sued in a dispute over who has the right to regulate prediction markets. 

Rhode Island’s attorney general Peter Neronha sued Kalshi and Polymarket last week, saying that the companies were violating the state’s sports-betting laws through their sports-related event contracts, an argument other states have also made. However, the CFTC asserts that the right to regulate these markets falls under the federal agency’s jurisdiction over swaps and derivatives, which it says includes event contracts. 

“CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets,” said CFTC Chairman Michael Selig in a press release announcing the lawsuit. “This power grab ignores the law and decades of precedent.”

The CFTC is seeking both to intervene in the state’s existing lawsuit against platforms and filed its own complaint against Rhode Island.

In all, 18 states are currently engaged in litigation over prediction markets. One of those states, Minnesota, has moved to outright ban them. 

In a social media post on Tuesday, President Donald Trump said it was critical that the commission’s exclusive jurisdiction over prediction market regulation is maintained.

While authorities in the states involved in legal proceedings over prediction markets are on both sides of the aisle, the CFTC has only gone after ones with Democratic attorneys general. Neronha, the Rhode Island attorney general, is also a Democrat. 

The Rhode Island Attorney General’s office could not be immediately reached for comment.

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