The Commodity Futures Trading Commission (CFTC) has filed a motion to intervene in Rhode Island Attorney General Peter Neronha’s lawsuit against Kalshi and Polymarket, seeking to “halt” efforts to apply state gambling laws against the prediction market operators.
“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. This power grab ignores the law and decades of precedent,” CFTC Chairman Michael Selig said.
“Event contracts allow businesses and individuals to hedge event-driven risks, enable investors to manage portfolio exposure and provide the public with information about the outcome of future events. These products are commodity derivatives and squarely within the CFTC’s regulatory remit. As I’ve said before, the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.”
Neronha filed the lawsuit against Kalshi and Polymarket in Rhode Island Superior Court on May 22, alleging both operators are “evading” state laws despite adopting the “design and terminology of traditional gambling operations.”
The Rhode Island Attorney General stated: “There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that. The problem here is that Rhode Island State law heavily regulates gambling, for good reason, and we allege that Kalshi and Polymarket are evading our laws. And Rhode Islanders are losing out.
“While these private companies continue to profit exponentially off hard-working people, the state’s third largest revenue stream is detrimentally affected, which means less money to fund critical parts of programs that serve Rhode Islanders every day.”
The Commission stated it has “clear and longstanding” authority to regulate event contracts, previously intervening with cases in Arizona, Connecticut, Illinois, New York and Minnesota.
The CFTC filed a lawsuit against Minnesota on May 20 in an attempt to block a new state law that would criminalize prediction market activity beginning on August 1. On May 29, Kalshi also filed a lawsuit against Minnesota lawmakers to prohibit the legislation from going into effect.
The AGA told Congress that the CFTC is moving beyond its intended remit on May 21 by allowing sports-related prediction markets to operate under federal derivatives rules
