On June 17 Kentucky Attorney General Russell Coleman filed lawsuits against Kalshi and Polymarket. State authorities believe that under the guise of prediction markets the platforms offer residents unlicensed sports betting, CoinTelegraph reports.

The lawsuits were filed with the Franklin County court. In the documents Kalshi and Polymarket are called "illegal bookmaking venues." Kentucky authorities claim that the services operate without the appropriate license and do not offer users the tools required by law for identifying gambling addiction and seeking help.

According to the attorney general, on the platforms one can bet on match winners and player statistics. He believes this is "ordinary betting, just under a different name."

According to one of the lawsuits, over the past year Kalshi conducted almost $23 billion in contract volume, 89% of which is related to sports. In a sample period of 2025, the share of sports events in trading volume, according to the prosecutor's estimate, was about 70%. The authorities recalled that only bookmakers licensed by the Kentucky Horse Racing and Gaming Corporation can offer bets on the outcome of sports events in Kentucky.

"These multibillion-dollar corporations and their legal tricks do not withstand any criticism. As one of the leaders of our state legislature aptly put it: 'If it looks like a duck and quacks like a duck...'" prosecutor Coleman said.

On July 15 The Wagering Consumer Protection Act will take effect in the state. It will prohibit licensed sports betting operators from working under contract with the platforms named in the lawsuits.

Polymarket representatives stated that the authorities' actions contradict the existing system of prediction market regulation by the U.S. Commodity Futures Trading Commission (CFTC). In turn, Kalshi insists that oversight of federally regulated exchanges should remain with the CFTC, not the states.

On April 2 the regulator filed lawsuits against Arizona, Connecticut, and Illinois, asserting exclusive jurisdiction over such contracts. On June 10 the CFTC put up for public discussion a draft of new rules on event-outcome contracts. The document proposes checking such products for links to gambling, war, terrorism, and other categories, as well as assessing whether they contradict the public interest. The Commission proposes allowing 90 days for review.

On June 17 federal judge Paul L. Maloney in Michigan rejected Polymarket's motion directed against state-level regulation of the platform. He noted that the platform's sports contracts are not swaps and do not fall under the CFTC's federal jurisdiction. In April the U.S. Third Circuit Court of Appeals, on the contrary, supported Kalshi in its dispute with the state of New Jersey and ruled that local regulators cannot block sports bets while proceedings are ongoing.

On June 16 a coalition of the American Gaming Association, the Indian Gaming Association, and two trade unions asked the Senate to include in the CLARITY Act a provision that would remove sports betting from the CFTC's purview and prohibit offering it through prediction market platforms.

In March senators Adam Schiff and John Curtis prepared the Prediction Markets Are Gambling Act bill. It is intended to ban sports and casino-like contracts at the federal level.

Recall that the Polymarket prediction market platform returned to the U.S. market on November 13, 2025, in beta mode after settling its dispute with the CFTC and paying a $1.4 million fine.

Source: ForkLog