Key Facts

• The CFTC filed a lawsuit against Kentucky on Tuesday, June 21, 2022, after the state sued prediction market operators Polymarket and Kalshi, along with Kalshi partners Coinbase, Robinhood, and Webull, for allegedly operating unlicensed and illegal gambling platforms.
• The CFTC seeks declaratory and injunctive relief to block Kentucky's legal action, arguing that Kalshi and Polymarket are designated contract markets under its authority, and their event contracts are "swaps" under federal commodities law.
• Kentucky Governor Andrew Beshear, Attorney General Russell Coleman, and the Kentucky Horse Racing and Gaming Corporation are among those named in the CFTC's lawsuit, which claims the state's actions are an attempt to shut down federally-regulated event contracts.
• The CFTC has been ramping up its effort to maintain authority over prediction markets since Chair Mike Selig was appointed in December, and Kentucky is now the ninth state that the CFTC has sued over state authorities taking action against prediction markets.
• The state of Kentucky alleged that the prediction market platforms offer users "few or no resources" to identify or seek help for a gambling problem, as required by state law, and imposed a 14.25% excise tax on prediction market transaction fees, which the CFTC argues makes it economically unviable for prediction markets to operate in the state.