The Commodity Futures Trading Commission (CFTC) is seeking a preliminary injunction and temporary restraining order against the state of Arizona over its laws regarding prediction markets.
The CFTC filed a motion in the U.S. District Court for the District of Arizona to halt Arizona’s efforts to apply state criminal and gambling laws against prediction markets that are regulated by the CFTC. This motion follows a lawsuit by the Department of Justice challenging Arizona’s preempted conduct.
“Arizona’s decision to weaponize preempted state criminal law against companies that comply with a comprehensive federal regime sets a dangerous precedent,” CFTC Chairman Michael Selig said. “The CFTC is committed to vigorously defending its exclusive authority over prediction markets. We are asking the court to send a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
The CFTC has filed complaints against Arizona, Connecticut, and Illinois seeking declaratory judgments that federal law grants the CFTC exclusive authority to regulate event contracts. In those motions it is requesting permanent injunctions preventing the states from enforcing preempted state laws against its registrants.
In addition, each of the three states had sent cease and desist letters to CFTC-regulated entities.
The CFTC says it has jurisdiction to regulate event contracts under the Commodity Exchange Act, which preempts state laws from regulating prediction markets.