Overview
- The CFTC filed suit on June 23 in the U.S. District Court for the Eastern District of Kentucky seeking a declaratory judgment and permanent injunction to stop Kentucky from enforcing its gambling laws against prediction‑market platforms.
- Kentucky Attorney General Russell Coleman sued Kalshi and Polymarket on June 17 for operating unlicensed sports wagering, and the state named partner firms including Coinbase, Robinhood, and Webull in its complaints.
- The federal complaint names Governor Andy Beshear, AG Russell Coleman, Revenue Commissioner Thomas B. Miller, and the Kentucky Horse Racing and Gaming Corporation as defendants and specifically challenges Kentucky’s April law that imposes a 14.25% excise tax on prediction‑market transaction fees.
- Kalshi and Polymarket removed the state suits to federal court, prompting venue fights that raise the risk of conflicting federal rulings across circuits and an eventual appeal to the U.S. Supreme Court on federal preemption.
- A resolution will shape whether prediction markets operate under a single federal framework or a patchwork of state rules, with direct effects on consumer protections, state tax revenue, platform access for residents, and how exchanges police market abuse and insider information.