The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Kentucky to assert its federal regulatory authority over prediction markets, according to The Block. This marks the ninth state the CFTC has sued in similar regulatory disputes.
The legal action follows Kentucky's own lawsuit last week targeting platforms such as Kalshi and Polymarket, accusing them of illegally operating sports betting and gambling services without state licenses. In its complaint filed in the U.S. District Court for the Eastern District of Kentucky, the CFTC argued that the state's attempt to shut down federally regulated designated contract markets infringes on the exclusive federal framework designed by Congress to oversee the nationwide swaps market. The CFTC also criticized Kentucky's legislative requirement imposing a 14.25% tax on transaction fees from prediction markets, stating that the regulation effectively makes it impossible for prediction markets to operate within the state.