US CFTC Sues Kentucky Over Actions Against Polymarket and Kalshi

The US Commodity Futures Trading Commission (CFTC) has sued the state of Kentucky over its enforcement action against prediction market platforms Kalshi and Polymarket. The federal regulator filed the lawsuit on Tuesday, claiming that Kentucky’s actions interfere with the CFTC’s exclusive authority to regulate these markets under federal law.

The lawsuit follows Kentucky Attorney General Russell Coleman’s legal action against Kalshi and Polymarket, in which the state alleged the platforms were operating illegal sportsbooks by offering sports-related contracts without complying with Kentucky gambling laws. Kentucky imposed a special transaction fee on federally regulated exchanges.

CFTC Chairman Michael S. Selig stated, “Kentucky is the latest state attempting to shut down federally-regulated event contracts.” He emphasized that prediction markets like Polymarket and Kalshi provide valuable information about future events and risk management products for businesses and individuals. “As I’ve consistently pledged, the CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets,” Selig added.

Kentucky has maintained that the platforms allow bettors to wager on sporting events similar to conventional sportsbooks. Kalshi and Polymarket deny the allegations, arguing that their contracts are derivatives products subject to CFTC regulation, not state gaming laws.

The CFTC has previously sued other states, including New Mexico and Minnesota, over similar crackdowns on prediction markets.

Source: https://coingape.com/us-cftc-sues-kentucky-for-action-against-polymarket-kalshi/