The US Commodity Futures Trading Commission (CFTC) has sued Kentucky, asserting exclusive federal jurisdiction over prediction markets. The lawsuit follows Kentucky's action against platforms Kalshi and Polymarket, which the state's Attorney General deemed illegal sportsbooks.
The lawsuit highlights a growing tension between federal and state regulators over the oversight of novel financial products like prediction markets, potentially impacting innovation and market access.
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 illegal sportsbooks 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 Michael Selig stated that prediction markets offer valuable information and risk management tools to Kentuckians 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 an excise tax on these platforms earlier in the year, which drew criticism from the CFTC. The commission has been actively asserting its authority over prediction markets, vowing to challenge any state attempts at regulation. The lawsuit against Kentucky is the first time the CFTC has taken such action against a state with a Republican attorney general.