Kentucky AG Coleman sues Kalshi and Polymarket over alleged illegal sports betting
Kentucky Attorney General Coleman sued Kalshi and Polymarket, alleging the CFTC-registered prediction market platforms operate illegal sportsbooks in the state. The suits, announced Wednesday and filed in Franklin Circuit Court, also name Coinbase as an affiliate of Kalshi, according to the lead source. Coleman argues that labeling products as regulated event contracts does not legalize what amounts to sports wagering under Kentucky law. The action follows a separate lawsuit by a prediction market coalition, whose members include Kalshi, challenging the state's 14.25% tax on event contract platforms. The Kentucky suits seek permanent injunctions barring the companies from operating in the state.
Kalshi and Polymarket must now defend against Coleman's state gambling suit on top of the tax challenge they already filed against Kentucky. Any adverse ruling on either front risks forcing both platforms to geofence the state while their federal CFTC registration is tested in preemption litigation.
Adds Kentucky to New Mexico and Michigan as the third state where Attorney General Coleman or Torrez has opened a gambling-enforcement front against CFTC-registered prediction market platforms this week — a pattern that tests whether federal registration can block state crackdowns before the CFTC's new formal rules take effect.