Government Sues to Stop State Enforcement Against Prediction Markets
The U.S. and the CFTC sued Kentucky to stop it from enforcing the state's gambling laws and a new excise tax against prediction markets.
In the Complaint for declaratory and injunctive relief filed in the U.S. District Court for the Eastern District of Kentucky, the government argued that federal commodity law gives the CFTC exclusive authority over event contracts.
The suit followed Kentucky's state-court actions against Kalshi, Polymarket, Robinhood, Coinbase, and Webull, which alleged the unauthorized offering of sports gambling under the state's consumer-protection and gambling laws. The government also challenged a Kentucky law enacted in April that imposes a 14.25 percent excise tax on prediction markets' transaction fees and the notional value of each event contract traded in the state.
The U.S. government asserted event contracts are "swaps" under the Commodity Exchange Act, that Kalshi and Polymarket are CFTC-regulated designated contract markets and Robinhood, Coinbase, and Webull CFTC-registered intermediaries.
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