Kentucky Govt. Files Lawsuit Against Polymarket, Kalshi Over “Illegal” Sports Betting
Highlights
- Polymarket and Kalshi are facing another state-level action from the Kentucky government.
- Authorities alleged that these platforms are violating the sports betting laws.
- However, the prediction market platforms have claimed that don't fall under state regulation but instead are regulated by the U.S. CFTC.
The Kentucky government has joined other U.S. states in suing prediction market operators for providing illegal sports betting in the state. It has sued both Kalshi and Polymarket for allegedly doing so.
Kentucky Moves To Sue Kalshi, Polymarket
Kentucky Attorney General Russell Coleman filed the lawsuit against the two firms. He claimed they are operating sports betting without meeting the state’s requirements for gambling. The state officials argue these platforms enable gamers to bet on sports matches in a similar way as they could do at a real sportsbook.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman stated in a statement. He added, “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test.”
The case is the latest in a series of arguments between state regulators and prediction market operators. Multiple states have raised concerns that the products of such platforms as Kalshi and Polymarket are subject to gambling laws rather than financial laws and are therefore not legal in the state.
The companies, however, say their markets are federally regulated derivatives products. They say contracts linked to actual sports results should be considered a commodity futures contract, regulated by the Commodity Futures Trading Commission, instead of a contract regulated by the state gaming agency.
Legal Quandary Grows Around Prediction Markets
The feud has grown hotter since the election of Donald Trump, whose federal agencies have been more aggressive in asserting their stance against state-level action against prediction markets. CFTC has attacked several state attempts to regulate the platforms and has indicated it would consider further legal action against states that would try to limit their activities.
Additionally, Kentucky regulators said the companies have evaded requirements that are generally associated with licensed gambling companies. These include those designed to curb problem gambling and consumer protection.
In another case, Kentucky filed a lawsuit against online casino operator VGW, claiming that it provides unlawful casino products of a sweepstakes type in Kentucky.
The answers to questions regarding the prediction market regulation have been mixed throughout the nation and judges have concluded that federal or state has primary jurisdiction over the market.
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