Key facts
- The CFTC has sued Kentucky, asserting exclusive federal jurisdiction over prediction markets.
- Kentucky's Attorney General had previously sued prediction market platforms Kalshi and Polymarket.
- The CFTC argues that Kentucky's actions interfere with federal law and Congress's intent for exclusive CFTC jurisdiction.
- Kentucky had also enacted a 14.25% excise tax on these platforms.
- The CFTC views prediction markets as federally regulated platforms offering valuable information and risk management tools.
The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Kentucky, asserting its exclusive jurisdiction over prediction markets. This legal action follows Kentucky Attorney General Russell Coleman's lawsuits against major prediction platforms Kalshi and Polymarket, accusing them of operating unlicensed and illegal gambling platforms and violating state laws.
The CFTC argues that Kentucky is improperly targeting these platforms and attempting to interfere with a federal regulatory scheme. CFTC Chair Mike Selig stated that prediction markets offer valuable information and risk management tools and that the commission is committed to protecting its federal interests. This marks the ninth state to face such a lawsuit from the agency.
Kentucky had also implemented a 14.25% excise tax on these platforms, which the CFTC argued made them economically unviable. The lawsuit comes weeks after the CFTC similarly sued New Mexico over state efforts to regulate Kalshi. President Donald Trump has previously voiced support for the CFTC's authority over prediction markets.