Kentucky Takes Aim at Prediction Markets, Potentially Opposing Trump Administration
President Donald Trump has expressed that states should not engage with companies like Kalshi and Polymarket, yet a firm GOP state is challenging that perspective.
— Kentucky has aligned itself with other U.S. states that have initiated legal actions against prediction market platforms involved in sports betting.
— The state’s involvement adds an interesting twist to the legal battle with the industry, as it is a politically conservative region that has supported President Donald Trump, despite the president siding with his federal regulator and the prediction market companies.
Kentucky’s attorney general has filed a lawsuit against leading prediction market firms Kalshi and Polymarket, accusing them of operating illegal sports betting without a proper license, thereby joining the increasing list of states opposing the growth of this sector.
Despite being a stronghold for Republicans, having voted for President Donald Trump with a 64% majority in 2024, Kentucky’s Governor Andy Beshear is a Democrat. The state now finds itself legally contesting one of Trump’s own policy positions, which asserts that oversight of prediction markets should be managed by the federal Commodity Futures Trading Commission (CFTC).
Kentucky is making arguments similar to those of other states against the event-contract platforms, asserting that they lack the necessary gaming licenses in the state. Furthermore, a statement released on Wednesday indicated that the companies and their affiliates — including Coinbase, Robinhood, and Webull — do not provide resources for individuals with gambling issues, as mandated by local law.
“Kalshi and Polymarket are running illegal sportsbooks in Kentucky and violating our laws,” remarked Kentucky Attorney General Russell Coleman, a Republican and former U.S. attorney appointed by Trump. “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test.»
A representative for Polymarket stated that the company is eager to respond to the allegations.
“This action contradicts the CFTC’s established framework for regulating prediction markets,” the spokesperson mentioned in a statement sent to Decryptnews.
To date, states that have challenged the prediction markets have faced counter lawsuits from the CFTC, where Chairman Mike Selig has taken a strong legal stance defending his agency’s authority as the sole regulatory body over event contracts, which he claims falls directly under the CFTC’s jurisdiction over U.S. derivatives.
Recently, Trump has also voiced support for Selig.
“It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive,” Trump posted on his social media platform, Truth Social. “Under my leadership, we are establishing ‘rules of the road’ that are the Gold Standard for the States.”
He characterized his political adversaries at the state level (including names like Minnesota Governor Tim Walz and Illinois Governor J.B. Pritzker) as “SCUM” who should not be permitted to dictate the rules.
“It is a major Industry, and we must protect it,” Trump continued. “Mike Selig, CFTC Chairman, and respected by all, is doing a great job.”
The CFTC has initiated lawsuits against eight states — most recently New Mexico — and has become involved in other legal matters concerning the industry.
However, Selig’s position, as the only current member of what is intended to be a five-member commission, has its critics. Trump’s former chief of staff, Mick Mulvaney, is now the executive director of Gambling Is Not Investing, a group opposing the prediction market expansion as an improper circumvention of state laws.
Additionally, former SEC and CFTC Chairman Gary Gensler — known for his confrontation with the crypto industry during his SEC tenure — recently submitted a brief to the Sixth Circuit Court of Appeals arguing that Kalshi’s sports betting breaches state gaming regulations.
Earlier on Wednesday, a federal judge dismissed Polymarket U.S.’s motion aimed at preventing Michigan from suing the platform. Such legal actions have become common as the industry prepares its defense, and many observers anticipate that the issue will escalate to the U.S. Supreme Court for a final resolution.
UPDATE (June 17, 2026, 21:27 UTC): Adds response from Polymarket.
UPDATE (June 17, 2026, 21:55 UTC): Adds map.
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In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.
In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.
