Robinhood's federal preemption claim broadens Connecticut standoff

Nine companies received cease-and-desist letters from Connecticut's Department of Consumer Protection. Underdog was one of them. On September 20, 2026, it filed a 39-page federal complaint in the District of Connecticut asking the court to declare that the state cannot apply its gaming statutes to event contracts traded on federally designated contract markets, and to permanently enjoin the DCP and Attorney General William Tong from enforcing those statutes against the company.

The complaint rests on a single structural argument: that the Commodity Exchange Act vests the CFTC with sole authority over event contracts listed on designated contract markets, including the determination of whether any such contract is contrary to the public interest. Connecticut's objections — that the platforms permit users under 21, reach people on self-exclusion lists, and accept wagers on in-state college teams — are state gaming concerns. Underdog's position is that the CEA forecloses the state from acting on any of them.

That is a bolder claim than it first appears. Federal preemption under the Supremacy Clause operates in two modes: field preemption, where Congress has occupied the regulatory space entirely, and conflict preemption, where state law stands as an obstacle to federal objectives. Underdog is arguing something close to field preemption — that the CEA's grant of jurisdiction to the CFTC over DCM-listed contracts leaves no room for state enforcement, regardless of what the underlying activity looks like to a state gaming regulator.

The argument has support in the CFTC's own enforcement posture. Robinhood has filed separately in federal court on similar grounds, and the CFTC has not moved to restrain any of the platforms at issue. When a federal regulator declines to act and private parties invoke preemption against state enforcement, courts have occasionally read the silence as consistent with the federal regulatory scheme. The problem is that silence is not the same as a determination. The CFTC has not said these contracts are lawful. It has said nothing. Connecticut will argue that a regulator's failure to prohibit something is not an occupation of the field.

I think the preemption claim survives the motion to dismiss stage, but not because the legal argument is clean. It survives because the statutory text of the CEA, read alongside Dodd-Frank's treatment of DCM jurisdiction, gives a federal court enough to work with to hold the state enforcement at bay while the underlying question is resolved. Whether it ultimately prevails depends on whether the court reads the CFTC's inaction as regulatory forbearance or regulatory absence — and those are not the same thing.

The standard a court applying conflict preemption will use is whether state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52 (1941). That standard requires a finding about what Congress intended the CFTC's jurisdiction to displace — and that finding is not available until someone asks the CFTC directly, on the record, what it intends its silence to mean.