CFTC Sues Kentucky in Latest Legal Salvo Over Prediction Markets
Jesse M. Cox Published 24/06/2026
The ongoing battle between the state of Kentucky and prediction market sites has taken another legal turn. The Commodities Futures Trading Commission (CFTC) has filed suit against Kentucky. Federal regulator of the prediction market industry, the CFTC, is seeking to block state enforcement actions against prediction market platforms like Kalshi and Polymarket.
The CFTC asserts that it has exclusive federal jurisdiction over event contracts offered by prediction market sites. Meanwhile, the Kentucky Attorney General's office argues that the sports-event contracts offered by prediction market sites are no different from sports betting and should be regulated at the state level.
The CFTC comes out swinging in Kentucky
CFTC officials have proven to be in a very litigious mood in recent months. That trend is continuing in Kentucky.
“Kentucky is the latest state attempting to shut down federally-regulated event contracts,” CFTC Chairman Michael S. Selig said in a press release. “Prediction markets provide Kentuckians with valuable information about the likelihood of future events and 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, and today’s lawsuit against Kentucky is yet another example of the Commission protecting its federal interests.”
Interestingly, Kentucky is the first state with a Republican attorney general to be sued by the CFTC. Selig notes that Kentucky is the latest state to attempt to shut down federally regulated prediction markets.
Kentucky filed its own lawsuit last week
The decision by the CFTC to go to court follows last week's legal filing by Kentucky Attorney General Russell Coleman. The Kentucky AG sued prediction market sites Robinhood, Kalshi, and Polymarket, claiming the sites are operating as illegal sports betting sites in violation of Kentucky law. Coleman believes that prediction market sites should be applying for the same state licenses as online sportsbooks. He also argues that they owe Kentucky huge sums of money in missed tax payments on the gambling revenue earned.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said in a press release when filing the suit.
“These multi-billion dollar corporations and their legal fictions don’t pass the sniff test. As one of our state legislative leaders said it best, ’If it looks like a duck and quacks like a duck …
The CFTC is suing several states
Kentucky is the ninth state to face a lawsuit from the CFTC over the ongoing prediction market issue. New Mexico, Illinois, Arizona, Connecticut, New York, Rhode Island, Wisconsin, and Minnesota are also facing legal action from the CFTC over prediction markets. All of these suits have been filed since early April.
“We will always follow the law,” Selig told Front Office Sports. “We will always look to the courts.”
According to Selig, Kentucky’s effort to restrict the functioning of CFTC-registered exchanges obstructs Congress’s decision to federally preempt state law.
Meanwhile, Kentucky is among 20 states that are involved in active litigation battles with prediction market platforms. Minnesota has gone as far as to ban prediction markets in the state.
“Simply calling them ‘sports event contracts’ doesn’t make them legal,” Coleman said.
A ruling in favor of Kentucky in this case would require prediction market platforms to geofence Kentucky, while the right of the CFTC to regulate these sites continues to be tested in court.