The state of Kentucky has launched a lawsuit against prediction market platforms Kalshi and Polymarket.
On Wednesday, CoinDesk reported that Kentucky Attorney General Russell Coleman took legal action against Kalshi and Polymarket. The lawsuit alleges that these platforms offered contracts related to sports events without obtaining proper state authorization.
Kentucky contends that these prediction market platforms essentially function as sports betting services but lack the required licenses.
The state also criticized companies like Coinbase and Robinhood, which provide prediction market services, for failing to implement systems to prevent and support those affected by gambling addiction.
Attorney General Coleman stated that Kalshi and Polymarket are operating illegal sports betting operations in violation of state laws. The legal arguments presented by these multi-billion dollar companies hold no water.
In response, Polymarket announced its intention to vigorously defend itself in court, arguing that their operations align with the regulatory framework established by the U.S. Commodity Futures Trading Commission (CFTC) for prediction markets.
Historically, state governments that have pursued legal action against prediction market platforms have faced countersuit from the CFTC. CFTC Chairman Mike Selig maintains that event contracts fall under derivative regulations, asserting that regulatory authority lies with the CFTC. This stance has led to ongoing legal disputes with various state governments.
Recently, U.S. President Donald Trump publicly backed Chairman Selig on Truth Social, declaring that the CFTC’s exclusive authority over prediction markets must be preserved, and the industry should be allowed to flourish.
Trump emphasized that prediction markets are a crucial industry that must be protected, and praised Selig’s performance, stating that Selig is doing an excellent job.