Kentucky Sues Kalshi, Polymarket Alleging Illegal Sports Betting

Kentucky has sued prediction-market platforms Kalshi and Polymarket, alleging they are operating illegal sports betting services.

CoinDesk reported on June 17 that Kentucky Attorney General Russell Coleman filed the lawsuit, alleging Kalshi and Polymarket offered sports betting without state authorization. The state also mentioned partners including Coinbase, Robinhood and Webull.

Kentucky argues that the two platforms do not hold the gambling licenses required under state law and do not provide user protections aimed at addressing gambling addiction.

"Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and are violating the law," Coleman said. He added that legal arguments from companies worth billions of dollars do not pass a common-sense test.

Polymarket said the action conflicts with the prediction-market regulatory framework established by the Commodity Futures Trading Commission and that it would fight the case in court.

The lawsuit comes as tensions escalate between federal and state authorities over who has the power to regulate prediction markets. CFTC Commissioner Mike Selig has opposed state enforcement efforts, arguing that prediction-market contracts fall under federal derivatives rules. The CFTC has recently filed related lawsuits against eight states, including New Mexico.

President Donald Trump has also publicly backed Selig, saying the CFTC's exclusive authority over prediction markets should be preserved. Former SEC and CFTC Chairman Gary Gensler and others have taken the opposite view, arguing that sports-event contracts should be subject to state gambling laws.