Kentucky Sues Kalshi, Polymarket Over Alleged Illegal Sports Betting

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

CoinDesk reported on June 17 that Kentucky Attorney General Russell Coleman filed the lawsuit, alleging the two platforms offer sports betting without state approval. The state also named related partners including Coinbase, Robinhood and Webull.

Kentucky argues that Kalshi and Polymarket do not hold the gambling licenses required under state law. It also says the platforms lack consumer protections designed to address problem gambling.

"Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and violating the law," Coleman said. "The legal arguments made by companies worth billions of dollars do not pass the common-sense test."

Polymarket said the action conflicts with the regulatory framework for prediction markets established by the Commodity Futures Trading Commission and pledged to fight the case in court.

The lawsuit comes as a broader dispute escalates between the federal government and the states over who has authority to regulate prediction markets. CFTC Commissioner Mike Selig has opposed state efforts to regulate such contracts, arguing they 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. Gary Gensler, a former SEC chair and former CFTC chairman, has taken the opposite view, arguing that contracts tied to sporting events should be subject to state gambling laws.