Kentucky sues Kalshi, Polymarket over sports betting

Kentucky sues Kalshi, Polymarket, and partners for allegedly offering unlicensed sports betting, intensifying the debate over state versus federal regulation of prediction markets.

Kentucky has initiated lawsuits against prediction market platforms Kalshi, Polymarket, VGW, and their partners, including Coinbase, Robinhood, and Webull. The state accuses these companies of offering unlicensed sports betting services by enabling users to place bets on sports outcomes, point spreads, and player statistics through event contracts. Kentucky argues that these activities qualify as regulated sports wagering, which requires proper state licensing. The lawsuits highlight the ongoing debate over whether online prediction markets should be regulated federally as derivatives or at the state level as gambling products. Kentucky’s attorney general asserts that these platforms are operating illegal sportsbooks and failing to meet consumer protection standards mandated by state law. A new Kentucky law, set to take effect on July 15, will further restrict relationships between sportsbooks and prediction market operators, tightening the regulatory environment in the state.