CoinDesk
Kentucky Attorney General Russell Coleman sued Kalshi and Polymarket on Wednesday, accusing both prediction-market platforms of running unlicensed sportsbooks in the state and naming partners Coinbase, Robinhood, and Webull for allegedly failing to provide problem-gambling resources Kentucky law requires.
The lawsuit adds Kentucky to a growing list of states — most recently New Mexico — that have moved against event-contract platforms offering sports bets without a gaming license. Federal courts have so far been receptive: a judge denied Polymarket's motion to block Michigan from suing earlier the same day. Most observers expect the jurisdictional fight to climb to the U.S. Supreme Court.
Why it matters
Kentucky's filing is the first from a strongly Republican state that voted 64% for President Donald Trump in 2024, putting Coleman — a Republican nominated as a U.S. attorney by Trump — directly at odds with the administration's policy posture. Trump has publicly backed CFTC Chairman Mike Selig's claim of exclusive federal authority over prediction markets, calling state-level opponents "SCUM" on Truth Social and endorsing Selig as "doing a great job."
The contradiction inside the GOP is now visible: a Trump-appointed state AG suing the very industry Trump is defending, even as the CFTC itself has countersued eight states. Former Trump chief of staff Mick Mulvaney now runs Gambling Is Not Investing, a group opposing the platforms, while former SEC and CFTC chair Gary Gensler filed a Sixth Circuit brief arguing Kalshi's sports contracts violate state gaming law.
Market impact
Combined prediction-exchange volumes fell 3.45% in May to $4.41 trillion, the lowest monthly print since September 2024. RWA perpetual futures bucked the trend with a 10.4% monthly rise to a new all-time high, but the broader derivatives layer around event contracts is cooling. With both Kentucky's suit and the Michigan ruling landing on the same day, legal exposure for Kalshi and Polymarket is widening on two fronts simultaneously — and the eventual venue for resolution now looks federal, not state.
Frequently asked questions
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Why is Kentucky's lawsuit against Kalshi and Polymarket politically notable?
Kentucky voted 64% for President Trump in 2024. AG Russell Coleman is a Republican and a former U.S. attorney nominated by Trump, yet he's suing the very prediction-market industry Trump publicly backed on Truth Social — putting a deep-red state on the opposite side of the administration's policy posture.
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What is Kentucky accusing Kalshi and Polymarket of?
Coleman alleges both platforms operate unlicensed sportsbooks in Kentucky and that their partners — Coinbase, Robinhood, and Webull — fail to provide problem-gambling resources required under state law.
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Where does the CFTC stand in the state-level fight over prediction markets?
CFTC Chairman Mike Selig claims exclusive federal authority over event contracts. The CFTC has countersued eight states — most recently New Mexico — and Trump has publicly backed Selig, calling state-level opponents "SCUM" on Truth Social.
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What happened with Polymarket in court on the same day?
A federal judge denied Polymarket U.S.'s motion to block Michigan from suing the platform, adding another legal loss for the industry on the same day Kentucky filed its suit. Most observers expect the jurisdictional fight to reach the U.S. Supreme Court.
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What happened to prediction-market trading volumes in May?
Combined prediction-exchange volumes fell 3.45% in May to $4.41 trillion, the lowest monthly total since September 2024. RWA perpetual futures bucked the trend with a 10.4% monthly rise to a new all-time high.
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