Kentucky Joins States Suing Prediction Market Platforms
Kentucky has become the latest state to file lawsuits against prediction market platforms, accusing industry leaders Kalshi and Polymarket of operating illegal sports betting operations.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” stated Kentucky Attorney General Russell Coleman. “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test.”
Kentucky’s action follows similar legal challenges from numerous states nationwide in recent months, which allege violations of state-level gambling laws by these platforms.
The platforms contend that their wagers, even those that closely resemble sports bets to users, should be classified as swaps under the federal jurisdiction of the Commodity Futures Trading Commission (CFTC). This interpretation was notably supported by the Trump administration.
The federal government, during President Trump’s tenure, engaged in a vigorous dispute with both Democratic and Republican-led states over the regulation of prediction markets. The CFTC and the Department of Justice initiated legal action against several states for attempting to regulate these novel platforms and vowed to pursue further legal challenges against any state that followed suit.
However, these federal threats have not dissuled other states from asserting their positions on the matter.
In its lawsuit, Kentucky regulators argued that by failing to register as gambling platforms, Kalshi and Polymarket have neglected crucial responsibilities, such as providing resources for users to address gambling addiction.
The state also filed suit against VGW, an online casino platform accused of offering illegal sweepstakes.
As legal battles over prediction market regulation continue to unfold across the country, outcomes have been mixed. In the Sixth Circuit, which encompasses federal courts in Kentucky, Ohio, Tennessee, and Michigan, two district court judges have issued preliminary rulings in favor of state regulators, while one judge has sided with the prediction markets.
The ultimate resolution of this complex issue is widely expected to be determined by the U.S. Supreme Court.
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