coindesk.com
Kentucky's attorney general has sued leading prediction market firms Kalshi and Polymarket, accusing them of offering illegal sports betting without a license, adding its name to the growing list of states opposing the rise of the industry.
But Kentucky is also strongly Republican in its overall politics, having voted for President Donald Trump with a 64% majority in 2024, though Governor Andy Beshear is a Democrat. Now it's found itself in the position of legally battling against one of Trump's own policy positions, that prediction market oversight belongs in the hands of the federal Commodity Futures Trading Commission.
For its part, Kentucky is making a similar case against the event-contract platforms as the other states, that they aren't licensed for gaming there. Additionally, it said in a Wednesday statement that the companies and their partners — naming Coinbase, Robinhood and Webull — don't offer resources for people with gambling problems, as required under local law.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” said Kentucky Attorney General Russell Coleman, a Republican and formerly a U.S. attorney nominated by Trump. “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test."
A spokesperson for Polymarket said the company looks forward to addressing the claims.
“This action runs counter to the CFTC's established framework for regulating prediction markets,” the spokesperson said in a statement emailed to CoinDesk.
So far, the states that have filed such a challenge against the prediction markets have met with counter suits from the CFTC, where Chairman Mike Selig has taken an aggressive legal stance defending his agency's authority as the sole regulatory power over events contracts, which he says falls directly into the CFTC's authority over U.S. derivatives.
And Trump has recently backed him up.
"It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive," Trump posted on his social media site, Truth Social. "Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States."
He asserted that his state-level political foes (offering names including Minnesota Governor Tim Walz and Illinois Governor J.B. Pritzker) are "SCUM" who shouldn't be allowed to set the rules.
"It is a major Industry, and we must protect it," Trump wrote. "Mike Selig, CFTC Chairman, and respected by all, is doing a great job."
The CFTC has sued eight states — most recently New Mexico — and leapt into other court matters involving the sector.