On June 17, Kentucky Attorney General Russell Coleman filed lawsuits against Kalshi and Polymarket. State authorities believe that these platforms, under the guise of prediction markets, are offering residents unlicensed sports betting, as reported by CoinTelegraph.
The lawsuits were filed in Franklin County Circuit Court. In the documents, Kalshi and Polymarket are labeled as "illegal betting platforms." Kentucky officials claim that these services operate without the necessary licenses and do not provide users with legally required tools for identifying gambling addiction and seeking help.
According to the Attorney General, users can bet on match winners and player statistics. He argues that this is "ordinary betting, just under a different name."
One of the lawsuits states that Kalshi facilitated nearly $23 billion in contract volume last year, with 89% related to sports. During the selected period in 2025, the share of sports events in trading volume was estimated by the prosecution to be around 70%. Authorities reminded that only licensed bookmakers, authorized by the Kentucky Horse Racing and Gaming Corporation, can offer bets on the outcomes of sporting events in Kentucky.
“These multi-billion dollar corporations and their legal tricks do not hold up to scrutiny. As one of our state’s legislative leaders aptly put it: ‘If it looks like a duck and quacks like a duck...’,” said Attorney Coleman.
On July 15, the Wagering Consumer Protection Act will come into effect in the state. This law will prohibit licensed sports betting operators from working under contract with the platforms mentioned in the lawsuits.
Representatives from Polymarket stated that the actions of the authorities contradict the established regulatory framework for prediction markets set by the U.S. Commodity Futures Trading Commission (CFTC). Meanwhile, Kalshi insists that oversight of federally regulated exchanges should remain with the CFTC, not the states.
On April 2, the regulator filed lawsuits against Arizona, Connecticut, and Illinois, claiming exclusive jurisdiction over such contracts. On June 10, the CFTC released a draft of new rules for event outcome contracts for public discussion. The document proposes to assess such products for connections to gambling, war, terrorism, and other categories, as well as to evaluate whether they contradict public interest. The Commission suggests a review period of 90 days.
On June 17, federal judge Paul L. Maloney in Michigan denied Polymarket's motion against state-level regulation of the platform. He indicated that the platform's sports contracts are not swaps and do not fall under the CFTC's federal jurisdiction. In April, the Third Circuit Court of Appeals supported Kalshi in its dispute with New Jersey, ruling that local regulators cannot block sports betting while litigation is ongoing.
On June 16, a coalition of the American Gaming Association, the National Indian Gaming Association, and two unions requested the Senate to include a provision in the CLARITY Act that would remove sports betting from CFTC oversight and prohibit offering it through prediction market platforms.
In March, Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act, which aims to ban sports and casino-like contracts at the federal level.
It’s worth noting that the prediction market platform Polymarket returned to the U.S. market on November 13, 2025, in beta mode after settling a dispute with the CFTC and paying a $1.4 million fine.