Kentucky Attorney General Russell Coleman sues prediction market firms over illegal sports betting

Kentucky Attorney General Russell Coleman filed lawsuits in Franklin Circuit Court against prediction‑market platforms Kalshi and Polymarket, their affiliate VG W, and partners including Coinbase, Robinhood and Webull. The complaints allege that the companies offer unlicensed sports‑betting contracts that violate Kentucky’s gambling and consumer‑protection statutes. Coleman is seeking injunctions to block the offerings and financial penalties of up to $2,000 per violation, or $10,000 when the conduct targets consumers 60 years or older.

The state also enacted a 14.25% excise tax on prediction‑market transaction fees, prompting a coalition of Kalshi, Crypto.com and Polymarket to sue to block the tax, arguing it is discriminatory and pre‑empted by federal law. The lawsuits occur amid a broader state‑federal clash, with the Commodity Futures Trading Commission asserting exclusive jurisdiction over contract markets and filing its own suits against several states. Other states have issued cease‑and‑desist letters to similar platforms, highlighting the expanding regulatory battle over whether online prediction markets should be treated as gambling or federally regulated derivatives.