The Commodity Futures Trading Commission and the United States moved to intervene in a federal case in Rhode Island involving prediction markets. The motion frames the dispute as a jurisdictional conflict between state gaming regulators and the federal derivatives-market framework. Kalshi, a CFTC-regulated exchange, sued Rhode Island after the state sought to restrict trading tied to sports outcomes. Rhode Island also pursued enforcement actions against Kalshi and Polymarket. Federal officials argue Rhode Island is attempting to preempt federal regulation by treating federally regulated event contracts as gambling and using state gaming laws to halt offerings. The central issue is whether state officials can override CFTC jurisdiction and enforce state laws against exchanges listing federally regulated event contracts.
"The Commodity Futures Trading Commission and the United States asked to intervene in a case pending in the U.S. District Court for the District of Rhode Island. The filing focuses on what federal officials describe as a jurisdictional conflict between state gaming regulators and the federal framework governing derivatives markets."
"According to the motion, the central question is "whether Rhode Island state officials can usurp the CFTC's jurisdiction and enforce state gaming laws against federally regulated exchanges in connection with the listing of federally regulated event contracts.""
"Kalshi, which operates as a CFTC-regulated exchange, sued Rhode Island last week over efforts to restrict trading tied to sports outcomes. Rhode Island later launched its own enforcement case against both Kalshi and prediction market platform Polymarket."
"In the proposed complaint, federal officials say Rhode Island claims that "Kalshi and Polymarket facilitate gambling (specifically sports wagering) in Rhode Island by allowing bettors to place wagers on the outcome of sports matches and individual player performances, under the guise of 'trading' 'event contracts' on 'prediction markets.'""
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