CFTC sues Kentucky to block state enforcement against prediction markets
The Commodity Futures Trading Commission (CFTC) sued Kentucky on June 23, 2026, to block the state from enforcing laws and taxes against federally registered prediction market platforms. The suit, filed in federal court, targets Kentucky's civil enforcement actions and a targeted tax that platforms say singles out CFTC-regulated markets. Kentucky Attorney General Coleman had previously sued Kalshi and Polymarket over alleged illegal sports betting and named Robinhood as a defendant in the Kalshi action. A coalition including Kalshi, Crypto.com, and Polymarket had already challenged Kentucky's 14.25% prediction markets tax in separate litigation. CFTC Chairman Michael S. Selig cited Kentucky as the latest state attempting to shut down prediction markets under federal oversight. The commission framed the suit as part of its broader defense of exclusive federal jurisdiction over event contracts.
Kalshi and Polymarket now face three overlapping Kentucky threats: the state gambling suit, the tax challenge they filed, and the CFTC's preemption case. Any adverse ruling on any front risks forcing both platforms to geofence Kentucky accounts while their federal registration is tested in court.
Brings the CFTC's running tally of federal preemption suits to at least four in the stretch against states that have targeted Kalshi and Polymarket — Minnesota, Rhode Island, New Mexico, and now Kentucky — as the agency presses its exclusive-jurisdiction claim against state enforcement actions.