Rhode Island is the latest state to challenge prediction markets on the legality of sports betting within its jurisdiction. As reported by The Providence Journal, opposing lawsuits from the state’s attorney general, Peter Neronha, and Kalshi were filed against each other earlier this week. Neronha sued both Kalshi and Polymarket, accusing the platforms of circumventing the state’s regulations that only allows sports gambling through a singular state-sponsored platform.

However, Kalshi proactively filed its own legal action against Rhode Island arguing that its event contracts, including those predicting the outcomes of sports events, can only be regulated on a federal level by the US Commodity Futures Trading Commission (CFTC). Still, Rhode Island’s attorney general is looking for a permanent court-ordered ban that prevents Kalshi and Polymarket from offering “sports-related events contract” in the state.

“There is no substantive difference between sports betting and ‘events contract’ in this context,” Neronha said in a press release. “Kalshi and Polymarket know that, and we know that.”

While the dual lawsuits only cover the legality in Rhode Island, its eventual ruling could create a major precedent on how prediction markets operate in other states. Before Rhode Island’s lawsuit, Nevada and New Jersey also sent cease-and-desist letters to prediction market platforms, only to end up in similar legal battles. More recently, Minnesota passed a bill that includes a ban on prediction markets operating in the state, which will likely be contested by the CFTC.