CFTC Sues Rhode Island as State Rules Threaten Prediction Markets

Federal officials are contesting Rhode Island’s effort to apply gambling laws to event-contract platforms. Prediction markets have become a major regulatory battleground as trading grows across political, economic, and sports-related events. The Commodity Futures Trading Commission moved to intervene in federal litigation, seeking to prevent Rhode Island from enforcing gambling restrictions against CFTC-registered markets. Rhode Island pursued civil penalties after a designated contract market complained about threatened state enforcement. Rhode Island argued that event contracts should be treated as commodities under the Commodity Exchange Act and remain under federal oversight. The dispute adds Rhode Island to other states challenging CFTC authority, including Arizona, Connecticut, Illinois, Minnesota, and New York. Federal regulators increasingly frame prediction markets as commodity derivatives rather than gambling products, especially as digital-asset interest expands.

"The Commodity Futures Trading Commission (CFTC) announced on May 28 that it moved to intervene in federal court litigation involving Rhode Island and CFTC-registered prediction markets. The agency seeks to block the state from applying gambling laws to federally regulated event-contract platforms, extending a broader jurisdiction fight tied to prediction markets and federal derivatives oversight. According to the filing, Rhode Island pursued civil penalties after a designated contract market filed a complaint against the state over threatened enforcement action."

"Rhode Island pursued civil penalties after a designated contract market filed a complaint against the state over threatened enforcement action. The regulator argued that event contracts fall under the Commodity Exchange Act and remain within federal oversight. The case adds Rhode Island to a growing list of states challenging the agency's authority, including Arizona, Connecticut, Illinois, Minnesota, and New York. CFTC Chairman Michael S. Selig stated: 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."

"Federal regulators continue to frame prediction markets as commodity derivatives rather than gambling products. The distinction has gained weight as event contracts tied to politics, economics, and sports draw more trading activity and digital-asset interest. President Donald Trump recently backed federal oversight. In a Truth Social post, Trump argued that the CFTC should maintain exclusive authority over prediction markets, calling the sector an important financial innovation and warni"

Read at news.bitcoin.com