CFTC Sues Kentucky to Prevent Violation of CFTC’s Exclusive Jurisdiction

WASHINGTON - The Commodity Futures Trading Commission today filed a lawsuit against Kentucky to block the state's efforts to shut down CFTC-registered contract markets using state laws.

The lawsuit follows Kentucky's decision to file civil enforcement actions in state court against CFTC-regulated designated contract markets, seeking to obtain large monetary penalties from those entities. In addition, the state recently created a new special transaction fee on CFTC-regulated DCMs to encourage these platforms to shut down in the state. Kentucky's effort to restrict the functioning of CFTC-registered exchanges obstructs Congress' decision to federally preempt state law.

"Kentucky is the latest state attempting to shut down federally-regulated event contracts," said Chairman Michael S. Selig. "Prediction markets provide Kentuckians with valuable information about the likelihood of future events and offer risk management products relied on by Kentucky businesses and individuals. As I've consistently pledged, the CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets, and today's lawsuit against Kentucky is yet another example of the Commission protecting its federal interests."

The CFTC has also initiated legal proceedings against Minnesota, Illinois, and Rhode Island, and has submitted amicus briefs to the U.S. Court of Appeals for the Sixth and Ninth Circuits as well as the Supreme Judicial Court of Massachusetts.