Federal Agency Steps Into Fight Over Online Betting in Rhode Island
The CFTC says only it can control prediction markets, not state governments.
A big fight is happening in Rhode Island over who gets to control online betting websites. The state says companies like Kalshi and Polymarket are breaking state gambling laws. But now a federal agency called the CFTC has jumped into the fight. The agency says only it has the power to control these betting websites, not the states.
The Commodity Futures Trading Commission, or CFTC, moved to join a lawsuit last week. This federal agency watches over trading and financial technology. It has five members who are chosen by the president. The CFTC argues that it alone has the right to control online betting on events like elections and sports games.
Rhode Island's Attorney General Peter Neronha started this fight by suing these companies. He says Kalshi and Polymarket are really sports betting businesses that don't have permission to work in Rhode Island. Just hours before his lawsuit, Kalshi sued the state first. The company says its business is different from gambling because people trade contracts on a federally regulated exchange.
The main issue for many states is losing tax money from gambling. When people use online prediction markets, states don't get tax revenue like they do from casinos. These online platforms work differently from traditional gambling because traders don't bet against the house. Instead, the companies make money from fees when people buy and sell contracts.
There are times when the sports betting platforms have a bad day, the prediction markets never have a bad day.
Comprehension quiz preview
1. What federal agency is fighting with Rhode Island over prediction markets?
2. Who is Rhode Island's Attorney General mentioned in the article?
3. How many members does the CFTC have?