The Commodity Futures Trading Commission moved to intervene in a federal lawsuit on Thursday to block Rhode Island from applying state gambling laws against federally registered prediction market platforms, making it the seventh state the agency has sued in an ongoing jurisdictional dispute.
Last week, Rhode Island Attorney General Peter Neronha brought suit against Kalshi and Polymarket, contending that the two platforms had run afoul of the state's sports-betting statutes by offering sports-related event contracts. Neronha also filed a parallel complaint in Providence County Superior Court seeking civil penalties and, in a statement, demanded prediction markets "stand down" and "disgorge their profits."
The CFTC intervened in Kalshi's existing federal lawsuit against the state and filed its own complaint against Rhode Island. The agency argues that the Commodity Exchange Act gives it sole authority to regulate designated contract markets, preempting state laws that purport to do the same.
"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 in a statement.
Neronha pushed back on the federal intervention. "We allege that Kalshi and Polymarket are operating outside of our sports betting laws, and ultimately, Rhode Islanders will be footing the bill for their actions," he said in a statement. "Federal intervention in this lawsuit doesn't change that."
The CFTC has previously filed similar lawsuits against Arizona, Illinois, and Connecticut, and has also taken legal action against New York, Minnesota, and Wisconsin. In all, 18 states are currently engaged in litigation over prediction markets. Although the broader litigation involves state officials from across the political spectrum, every state the CFTC has chosen to sue has been led by a Democratic attorney general, according to CNBC. Neronha is a Democrat.
President Donald Trump weighed in on Tuesday, writing on social media that maintaining the CFTC's exclusive jurisdiction over prediction market regulation was critical.
In its court filing, the CFTC cautioned that state enforcement of gambling statutes against federally registered exchanges could strip Rhode Islanders of access to those platforms' products and erode the federal agency's broader mission of fostering innovation and competition across U.S. derivatives markets.