CFTC and DOJ intervene in Rhode Island lawsuit to defend Kalshi and Polymarket
The Commodity Futures Trading Commission intervened Thursday, May 28 in Rhode Island Attorney General Peter F. Neronha's lawsuit against prediction market platforms Kalshi and Polymarket, filing a motion in federal district court. The agency argued that Kalshi's event contracts are swaps under the federal Commodity Exchange Act and that federal law grants the CFTC exclusive oversight authority over such products, precluding state gambling enforcement. The Department of Justice also filed an appearance ahead of a motion for injunctive relief. The intervention continues a pattern of Democratic state attorneys general taking action against prediction markets, with the CFTC now staking out federal authority in an escalating federal-state conflict over which regulator governs sports-linked event contracts.
A federal preemption win arms the CFTC's parallel challenges in Minnesota and Wisconsin while deflecting Pennsylvania's separate opposition filing. Kalshi gains institutional backing it lacked when suing Ohio alone last October.
Brings to three the active federal preemption cases the CFTC has filed alongside Kalshi against Democratic state attorneys general, after Minnesota and parallel to Wisconsin and Pennsylvania enforcement threats.