Breaking: US CFTC Sues Kentucky For Action Against Polymarket & Kalshi
Highlights
- The U.S..CFTC has slapped a lawsuit on the Kentucky government.
- The regulator claims that Kentucky has stepped into its jurisdiction of exclusive authority over regulating prediction markets.
- Last week, Kentucky had announced suing Polymarket and Kalshi for alleged "illegal" gambling in sportsbooks.
The US Commodity Futures Trading Commission (CFTC) has sued Kentucky for taking action against prediction market platforms Kalshi and Polymarket.
US CFTC Files Suit Against Kentucky
The federal regulator said Tuesday that it would try to prevent Kentucky from enforcing state laws on CFTC-regulated contract markets. The lawsuit comes on the heels of Kentucky’s enforcement action against the federally regulated designated contract markets (DCMs).
Kentucky has also imposed a special transaction fee for federally-regulated exchanges, according to the US CFTC. The agency said the state’s moves are at odds with federal law and are an interference with Congress’ intent to give the CFTC exclusive jurisdiction over such markets.
“Kentucky is the latest state attempting to shut down federally-regulated event contracts,” CFTC Chairman Michael S. Selig said in a statement. Earlier, the US CFTC sued New Mexico, Minnesota, and other states over crackdown on prediction markets.
He added that prediction markets like Polymarket and Kalshi can offer “valuable information about the likelihood of future events.” Moreover, he added that these avenues “offer risk management products relied on by Kentucky businesses and individuals.”
“As I’ve consistently pledged, the CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets,” Selig said. Further, he added “Today’s lawsuit against Kentucky is yet another example of the Commission protecting its federal interests.”
About Kentucky’s Legal Action Against Polymarket, Kalshi
The lawsuit follows Kentucky Attorney General Russell Coleman’s lawsuit against Kalshi and Polymarket. The state officials said the platforms were providing sports-related contracts that are actually sports betting products, but not in accordance with Kentucky gambling rules.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said when announcing the state action.
Kentucky has maintained the platforms can offer bettors the chance to place wagers on like sporting events as conventional sportsbooks.
Kalshi and Polymarket have denied these allegations. The companies argue that their contracts are “derivatives products” subject to federal regulation by the CFTC, and not state gaming commissions.
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