Kentucky has sued 5 prediction market platforms, together with Kalshi and Polymarket, including to a wave of US states launching authorized fights with prediction markets over sports activities occasion contracts.
State Lawyer Basic Russell Coleman said in a press release Wednesday that his workplace filed lawsuits in state court docket towards Polymarket and Kalshi — additionally naming Kalshi companions Coinbase, Robinhood and Webull — accusing them of “working unlicensed and unlawful sports activities betting and playing platforms.”
“Kalshi and Polymarket are working unlawful sportsbooks in Kentucky and breaking our legal guidelines,” Coleman stated. “These multi-billion greenback companies and their authorized fictions don’t go the sniff take a look at. As one in every of our state legislative leaders stated it finest, ‘If it seems like a duck and quacks like a duck…’”
Kalshi and Polymarket collectively recorded $25 billion in month-to-month buying and selling quantity in Might, per Token Terminal. Lawsuits from a number of US states threat locking them out of a number of the largest markets within the US.
Kentucky Lawyer Basic Russell Coleman provides a speech in April. Supply: YouTube
No less than 17 different states have taken prediction market operators to court docket, attracting the involvement of the US Commodity Futures Buying and selling Fee and the White Home.
A number of state authorities have argued that occasion contracts tied to sports activities are sports activities betting and require state-level licenses. Prediction markets have argued that their occasion contracts are swaps regulated underneath federal commodities regulation.
That place is backed by the CFTC, which has sued eight states after they took motion towards prediction markets, claiming they have been stepping on its authority.
Kentucky’s lawsuits claimed that Polymarket, Kalshi and their companions are “doing enterprise with no Kentucky gaming license or following state rules” and that their sports activities occasion contracts “fall squarely inside the definition of ‘sports activities wagering’ underneath Kentucky regulation.”
The state additionally alleged the platforms provide customers “few or no assets” to establish or search assist for a playing drawback as required by state regulation.
A Polymarket spokesperson informed Cointelegraph Kentucky’s motion “runs counter to the CFTC’s established framework for regulating prediction markets. We stay up for addressing these claims via the suitable authorized course of.”
Kalshi spokesperson Jacki McGavick informed Cointelegraph that “Kalshi is a federally regulated change — the CFTC is our regulator, not the states. Courts have already acknowledged this, and we’re assured they may right here too.”
The CFTC didn’t instantly reply to a request for remark.
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Kalshi and Polymarket, via a coalition of platforms, are already tied up in authorized motion with Kentucky after suing the state on Friday to assert its first-in-the-country 14.25% tax on prediction market transaction charges is discriminatory and oversteps federal regulation.
Kentucky’s motion comes after authorities in Montana, Nevada, Utah, Iowa, Illinois, Ohio, Tennessee, New York, New Jersey, Connecticut and Maryland had issued cease-and-desist letters to prediction markets and have been subsequently sued by the platforms.
Washington, Arizona, New Mexico, Wisconsin, Michigan, Massachusetts and Kentucky have additionally chosen to sue prediction market platforms, together with Kalshi.
A number of the authorized battles have thus far reached appeals courts and have seen blended outcomes. On Wednesday, a Michigan federal decide ruled towards Polymarket in its lawsuit towards the state, discovering that its sports activities occasion contracts aren’t swaps underneath the CFTC’s authority.
Different courts have additionally sided with prediction markets, such because the Third Circuit Courtroom of Appeals’ ruling in April that New Jersey regulators couldn’t stop Kalshi from providing sports activities occasion contracts within the state.
US President Donald Trump, whose son Donald Trump Jr. is on the advisory board for Polymarket and is an adviser to Kalshi, said in May that it was “critically necessary that the CFTC’s unique authority over Prediction Markets is maintained.”
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