motion

when

Challenge

<h2 id="b-tldr-b">TLDR:</h2>
<ul>
 <li>
 <ul>
 <li>The CFTC filed a federal motion to stop Rhode Island from applying state gambling laws to registered prediction markets.</li>
 <li>Rhode Island’s attorney general demanded prediction market operators stand down and disgorge profits via a state court complaint.</li>
 <li>Chairman Selig confirmed the CFTC holds sole regulatory authority over event contracts under the Commodity Exchange Act.</li>
 <li>Rhode Island becomes the sixth state, after Arizona, Connecticut, Illinois, New York, and Minnesota, to challenge CFTC jurisdiction.</li>
 </ul></li>
</ul>
The Commodity Futures Trading Commission <a href="https://www.cftc.gov/PressRoom/PressReleases/9238-26" rel="noopener noreferrer nofollow">has filed</a> a motion to intervene in a federal lawsuit in Rhode Island. The agency seeks to halt the state’s attempt to enforce gambling laws against its registered prediction market operators. 
The move comes after Rhode Island filed a parallel state case demanding civil penalties and asking prediction markets to “disgorge their profits.” This action adds Rhode Island to a growing list of states challenging the CFTC’s regulatory authority.
<h2 id="b-rhode-island-challenge-follows-a-wave-of-state-lawsuits-b">Rhode Island Challenge Follows a Wave of State Lawsuits</h2>
The confrontation began when a <a href="https://blockonomi.com/cftc-charges-google-employee-with-insider-trading-on-polymarket-using-search-data/" rel="noopener noreferrer nofollow">CFTC</a>-registered designated contract market flagged an imminent enforcement threat from Rhode Island. 
The state’s attorney general responded by filing a complaint in state court seeking substantial civil penalties. Rhode Island also issued a public statement demanding that prediction market operators “stand down.”
The CFTC moved quickly in the U.S. District Court for the District of Rhode Island to stop the state action. The agency argues that state gambling laws cannot legally apply to federally regulated prediction markets. Federal preemption under the Commodity Exchange Act is the central legal basis for the CFTC’s position.
Rhode Island is far from the first state to challenge the CFTC’s authority over prediction markets. Prior lawsuits have come from Arizona, Connecticut, Illinois, New York, and Minnesota. 
Each case follows a similar pattern of states asserting jurisdiction over markets that the CFTC considers exclusively federal.
Speaking on the pattern of state challenges, CFTC Chairman Michael S. Selig stated: “<cite>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 <a href="https://parameter.io/prediction-markets-face-bipartisan-scrutiny-in-senate-sports-integrity-hearing/" rel="noopener noreferrer nofollow">prediction markets.</a>“</cite> He went on to call the legal maneuvers a “power grab” that “ignores the law and decades of precedent.”
<h2 id="b-cftc-asserts-sole-authority-under-the-commodity-exchange-act-b">CFTC Asserts Sole Authority Under the Commodity Exchange Act</h2>
The CFTC insists the Commodity Exchange Act grants it clear and exclusive jurisdiction over event contracts. That statute preempts state laws that try to regulate federally designated contract <a href="https://moneycheck.com/crypto-markets-plunge-as-geopolitical-tensions-escalate-bitcoin-dips-below-73k/" rel="noopener noreferrer nofollow">markets.</a>
The agency views prediction markets as commodity derivatives, placing them squarely within its regulatory scope.
Defending the broader purpose of prediction markets, Chairman Selig added: “<cite>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.”</cite>
He closed by reaffirming the agency’s resolve, saying the CFTC has “the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.”
The Commodity Exchange Act was designed with financial innovation in mind. It allows new and evolving products to operate within CFTC-supervised markets without facing patchwork state regulation. The CFTC says this design is being undermined by state-level enforcement actions across multiple jurisdictions.
The <a href="https://coincentral.com/new-bitcoin-tax-exemption-bill-in-rhode-island-targets-small-transactions/" rel="noopener noreferrer nofollow">Rhode Island</a> intervention marks the latest test of that federal framework. With litigation now active in at least six states, the outcome of these cases could shape how prediction markets operate across the country going forward.
The post <a href="https://blockonomi.com/cftc-moves-to-block-rhode-island-from-regulating-federally-licensed-prediction-markets/" rel="noopener noreferrer nofollow">CFTC Moves to Block Rhode Island from Regulating Federally Licensed Prediction Markets</a> appeared first on <a href="https://blockonomi.com" rel="noopener noreferrer nofollow">Blockonomi</a>.

CFTC Moves to Block Rhode Island from Regulating Federally Licensed Prediction Markets

Table of Contents

Blockonomi

Other articles published on May 29, 2026

Join our free newsletter for daily crypto updates!