WASHINGTON — The Commodity Futures Trading Commission moved to intervene in a lawsuit today in the U.S. District Court for the District of Rhode Island to halt the state’s efforts to apply state gambling laws against CFTC-registered contract markets. 

In response to a complaint filed late last week by a CFTC-registered designated contract market threatened with impending unlawful enforcement by the state, Rhode Island filed a complaint of its own in a parallel state case on Friday seeking significant civil penalties. In a statement, Rhode Island’s attorney general demanded predictions market “stand down” and “disgorge their profits.”

The CFTC’s action today reiterates its continued commitment to affirming exclusive jurisdiction over CFTC-registered prediction markets. The Rhode Island motion becomes the latest instance of states challenging CFTC’s jurisdiction, following litigation in Arizona, Connecticut, Illinois, New York, and most recently, Minnesota.

“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,” said CFTC Chairman Michael S. Selig. “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. These products are commodity derivatives and squarely within the CFTC’s regulatory remit. As I’ve said before, the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.” 

The CFTC has clear and longstanding exclusive jurisdiction to regulate event contracts under the Commodity Exchange Act, which preempts state laws purporting to regulate designated contract markets, commonly referred to as prediction markets. The Commodity Exchange Act is designed to account for innovation in the financial markets, allowing for new and emerging use cases within CFTC-regulated markets.