- The state of Rhode Island filed a lawsuit against prediction market operators Polymarket and Kalshi in an attempt to make them follow state sports betting laws.
- The CFTC decided to countersue in response, claiming that there is no legal basis for the state to force the operators to follow such laws.
PROVIDENCE, R.I. – Lawsuits continue to pile up when it comes to prediction markets, as the Commodity Futures Trading Commission (CFTC) is now suing the state of Rhode Island for filing lawsuits against Kalshi and Polymarket.
Last week, Attorney General Peter F. Neronha filed lawsuits against the two prediction markets, claiming that their operations are essentially another form of illegal sports betting because they do not follow the same laws as legal sports betting sites in Rhode Island.
Michael S. Selig, Chairman of the CFTC, swiftly hit back against these claims, once again emphasizing the difference between event contracts and legal sports betting sites by highlighting other current world events that are available for trade other than sports.
The lawsuit from the state of Rhode Island aims to override the authority of the CFTC in order to make prediction markets complicit with the sports betting laws of the state, which would set a new precedent for prediction markets locally and nationwide.
However, Rhode Island is not the first state to take such action against prediction markets, as the CFTC states, “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.”
The dispute ultimately comes down to the definition of what constitutes sports betting, as there has been a long-standing debate over whether or not prediction markets offering contracts for sporting events qualify as such.
Clearly, there has been no definitive evidence or verbiage to cause any significant legal changes to happen, so prediction markets will likely continue to operate as they have for the foreseeable future barring an unexpected turn of events.
