Kalshi, Polymarket Sue Kentucky Over Prediction-Market Tax, Call It Unconstitutional
Forecast Trend Report by Period
Prediction-market platforms including Kalshi and Polymarket are mounting a joint challenge to Kentucky's tax measures.
ABC reported on June 13 that the Fair Markets Coalition, whose members include Kalshi, Crypto.com and Polymarket, filed suit in Kentucky state court on June 12 to block the imposition of a tax on prediction-market transactions.
The Kentucky legislature passed a bill in April imposing a 14.25% tax on the transaction fees charged by prediction-market operators. In their complaint, the plaintiffs said the new tax exceeds the 9.75% levy on horse-racing betting, one of the state's traditional industries. They argued the measure is discriminatory, unconstitutional and preempted by federal law.
Kalshi said in a statement that taxing federally regulated markets would push users toward illegal platforms with no oversight or protections. It added that, as a regulated US company, it would fight for Kentucky residents' right to access safe and legal markets.
Kentucky officials, however, signaled they would fight back. In a statement, Kentucky Attorney General Russell Coleman said his office would defend state law and residents against out-of-state companies seeking to undermine Kentucky's sports-betting laws. He added that his lawyers had the best odds of winning in any courtroom.
Prediction-market platforms have also faced persistent controversy in recent months over allegations that users exploited insider information for improper gains.
One prominent case involved former US Representative George Santos. After saying he would attend President Donald Trump's address to Congress, Santos allegedly bet on Kalshi that he would not appear and was later referred to federal prosecutors over insider-trading allegations. In April, Gannon Ken VanDyke, a US special operations soldier, was also charged with making more than $400,000 in improper gains on Polymarket using classified information related to an operation to capture Venezuelan President Nicolas Maduro.
