Written by Jesse Coghlanstaff editorReviewed by Felix Ngstaff editor
Written by Jesse Coghlanstaff editor
Reviewed by Felix Ngstaff editor
Kentucky sues Kalshi, Polymarket, joining prediction market legal battle
Latest NewsPublishedJun 18, 2026
Kentucky Takes on Prediction Markets in Latest Legal Battle
The state of Kentucky has filed lawsuits against Polymarket and Kalshi, two major prediction market platforms, accusing them of operating unlicensed and illegal sports betting and gambling platforms. This move is the latest in a wave of US states launching legal fights with prediction markets over sports event contracts. Kentucky Attorney General Russell Coleman stated that these platforms are “operating illegal sportsbooks” and “breaking our laws.”
Kalshi and Polymarket have recorded significant trading volumes, with $25 billion in monthly trading volume in May. However, lawsuits from multiple US states risk locking them out of some of the largest markets in the US. The platforms argue that their event contracts are swaps regulated under federal commodities law, a position backed by the US Commodity Futures Trading Commission.
Regulatory Disputes
At least 17 other states have taken prediction market operators to court, with multiple state authorities arguing that event contracts tied to sports are sports betting and require state-level licenses. The CFTC has sued eight states after they took action against prediction markets, claiming they were stepping on its authority. Kentucky’s lawsuits claim that Polymarket, Kalshi, and their partners are “doing business without a Kentucky gaming license” and that their sports event contracts “fall squarely within the definition of ‘sports wagering’ under Kentucky law.”
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That position is backed by the CFTC, which has sued eight states after they took action against prediction markets, claiming they were stepping on its authority.
Kentucky’s lawsuits claimed that Polymarket, Kalshi and their partners are “doing business without a Kentucky gaming license or following state regulations” and that their sports event contracts “fall squarely within the definition of ‘sports wagering’ under Kentucky law.”
The state also alleged the platforms offer users “few or no resources” to identify or seek help for a gambling problem as required by state law.
A Polymarket spokesperson told Cointelegraph Kentucky’s action “runs counter to the CFTC’s established framework for regulating prediction markets. We look forward to addressing these claims through the appropriate legal process.”
Kalshi spokesperson Jacki McGavick told Cointelegraph that “Kalshi is a federally regulated exchange — the CFTC is our regulator, not the states. Courts have already recognized this, and we’re confident they will here too.”
The CFTC did not immediately respond to a request for comment.
Related: Prediction market battle gets closer to Supreme Court
Kalshi and Polymarket, through a coalition of platforms, are already tied up in legal action with Kentucky after suing the state on Friday to claim its first-in-the-country 14.25% tax on prediction market transaction fees is discriminatory and oversteps federal law.
Kentucky’s action 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 were subsequently sued by the platforms.
Washington, Arizona, New Mexico, Wisconsin, Michigan, Massachusetts and Kentucky have also chosen to sue prediction market platforms, including Kalshi.
Some of the legal battles have so far reached appeals courts and have seen mixed results. On Wednesday, a Michigan federal judge ruled against Polymarket in its lawsuit against the state, finding that its sports event contracts are not swaps under the CFTC’s authority.
Other courts have also sided with prediction markets, such as the Third Circuit Court of Appeals’ ruling in April that New Jersey regulators could not prevent Kalshi from offering sports event contracts in 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 important that the CFTC’s exclusive authority over Prediction Markets is maintained.”
Magazine: Should users be allowed to bet on war and death in prediction markets?
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.
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