Kentucky's Attorney General has filed lawsuits against Polymarket and Kalshi, alleging they are operating unlicensed sports betting platforms.
Kentucky's Attorney General Russell Coleman has initiated legal action against both Kalshi and Polymarket, alleging that these platforms are unlawfully providing sports betting services to residents without the necessary licenses. The lawsuits were filed in Franklin County Circuit Court, where the platforms are described as "illegal betting platforms" due to their lack of required regulatory oversight.
The state claims these platforms allow users to place bets on various sports outcomes, which the Attorney General argues constitutes standard betting practices disguised under the name of prediction markets. Coleman pointed out that Kalshi alone facilitated almost $23 billion in contract volume last year, with a significant portion—89%—linked to sports.
According to court documents, during 2025, sports events constituted approximately 70% of the trading volume on these platforms. Kentucky law mandates that only licensed bookmakers, approved by the Kentucky Horse Racing and Gaming Corporation, are permitted to accept bets on sports events.
“These multi-billion dollar corporations and their legal tricks do not hold up to scrutiny,” Coleman stated, echoing concerns that these platforms are circumventing legal requirements.
Effective July 15, the Wagering Consumer Protection Act will come into force, restricting licensed sports betting operators from partnering with the entities named in the lawsuits.
In response, Polymarket has argued that Kentucky's actions are inconsistent with the regulatory framework established by the U.S. Commodity Futures Trading Commission (CFTC). Meanwhile, Kalshi maintains that the oversight of federally regulated exchanges should be solely under the CFTC's jurisdiction.
On April 2, the CFTC filed lawsuits against several states, including Arizona and Connecticut, claiming exclusive authority over prediction market contracts. Recent developments include a federal judge denying Polymarket's request to challenge state regulation, ruling that its sports contracts do not qualify as swaps under federal jurisdiction.
Additionally, a coalition of gaming associations has urged the Senate to amend the CLARITY Act to limit CFTC oversight on sports betting, as federal lawmakers seek to introduce legislation that would classify prediction market contracts as gambling.
Notably, Polymarket relaunched in the U.S. market in November 2025 after settling with the CFTC and paying a fine of $1.4 million.
