The US Commodity Futures Trading Commission is suing Kentucky, now the ninth state the regulator has taken to court in its fight to maintain control over prediction markets.
The lawsuit, filed in federal court on Tuesday, seeks to block Kentucky’s legal action against five prediction market operators from last week. The state had sued Polymarket and Kalshi, along with partners Coinbase, Robinhood, and Webull, claiming they were operating without a Kentucky gaming license.
CFTC Chair Mike Selig didn’t mince words. “Kentucky is the latest state attempting to shut down federally-regulated event contracts,” he said. “The CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets.”
The CFTC argued that Kalshi and Polymarket are designated contract markets under its authority, and their event contracts qualify as “swaps” under federal commodities law. Coinbase, Robinhood, and Webull are CFTC-registered futures commission merchants that can offer these contracts in partnership with a designated market.
The regulator also took aim at Kentucky’s recent 14.25% excise tax on prediction market transaction fees, calling it an attempt to make these platforms economically unviable in the state.
This isn’t the CFTC’s first rodeo. The agency sued New Mexico just weeks ago over similar efforts to apply state gaming laws to Kalshi. In May, President Trump publicly backed the CFTC, calling it “critically important” that the regulator maintain authority over prediction markets. Donald Trump Jr. has invested in Polymarket and advises Kalshi.
Kentucky’s sports betting has been under the jurisdiction of the Kentucky Horse Racing and Gaming Corporation since 2023, which explains why the state is pushing back hard against what it sees as unlicensed gambling operations.
