Kentucky AG Coleman sues Kalshi and Polymarket over alleged illegal sports betting
Kentucky Attorney General Russell Coleman sued prediction market platforms Kalshi and Polymarket on Wednesday, June 17, alleging their sports event contracts constitute illegal sports betting under state law. The suits, filed in Franklin Circuit Court, seek permanent injunctions barring both platforms from operating in Kentucky. Coinbase was named as an affiliate in the state's court filings. The actions came shortly after a prediction markets coalition that includes Kalshi and Crypto.com sued Coleman over the state's 14.25% tax on prediction market activity. Kentucky argues that labeling the products as regulated financial instruments does not shield them from state gambling enforcement. Both platforms deny the allegations.
Kalshi and Polymarket must now defend Kentucky accounts from both Coleman's state gambling suit and the separate tax challenge they filed against the same state. Any adverse ruling on either front risks forcing both platforms to geofence Kentucky while their federal CFTC registration is tested in preemption litigation.
The Kentucky suits add Coleman to the state-enforcement pattern already joined by New Mexico Attorney General Torrez, making this the second AG-led gambling case against the same CFTC-regulated platforms in under three days and deepening the clash between federal registration and state gambling law.