Kentucky targets prediction markets, puts red state in potential clash with Trump team

NewsVideoPricesResearchEventsData & IndicesSponsored Jun 17, 2026, 9:20 p.m. 3 min readKentucky has sued Kalshi and Polymarket, opposing the stance of President Donald Trump. (Douglas Sacha/Getty Images)SummaryKentucky has joined with the other U.S. states that have brought lawsuits against prediction market platforms engaging in sports betting.The state adds a wrinkle in the legal fight with the industry, because it's a politically conservative state that's been a supporter of President Donald Trump, though the president sides with his federal regulator and the prediction market firms.Kentucky's attorney general has sued leading prediction market firms Kalshi and Polymarket, accusing them of offering illegal sports betting without a license, adding its name to the growing list of states opposing the rise of the industry.But Kentucky is also strongly Republican in its overall politics, having voted for President Donald Trump with a 64% majority in 2024, though Governor Andy Beshear is a Democrat. Now it's found itself in the position of legally battling against one of Trump's own policy positions, that prediction market oversight belongs in the hands of the federal Commodity Futures Trading Commission.For its part, Kentucky is making a similar case against the event-contract platforms as the other states, that they aren't licensed for gaming there. Additionally, it said in a Wednesday statement that the companies and their partners — naming Coinbase, Robinhood and Webull — don't offer resources for people with gambling problems, as required under local law.“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” said Kentucky Attorney General Russell Coleman, a Republican and formerly a U.S. attorney nominated by Trump. “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test."So far, the states that have filed such a challenge against the prediction markets have met with counter suits from the CFTC, where Chairman Mike Selig has taken an aggressive legal stance defending his agency's authority as the sole regulatory power over events contracts, which he says falls directly into the CFTC's authority over U.S. derivatives.And Trump has recently backed him up."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 site, Truth Social. "Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States."He asserted that his state-level political foes (offering names including Minnesota Governor Tim Walz and Illinois Governor J.B. Pritzker) are "SCUM" who shouldn't be allowed to set the rules."It is a major Industry, and we must protect it," Trump wrote. "Mike Selig, CFTC Chairman, and respected by all, is doing a great job."The CFTC has sued eight states — most recently New Mexico — and leapt into other court matters involving the sector.But the position staked out by Selig, who leads the CFTC as the sole current member of what's meant to be a five-member commission, has detractors. Trump's own former chief of staff, Mick Mulvaney, is executive director of Gambling Is Not Investing, a group opposing the prediction market surge as an inappropriate end-run around state laws.And former Securities and Exchange Commission and CFTC Chairman Gary Gensler — who took on the crypto industry during his tenure atop the SEC — recently filed a brief with the Sixth Circuit Court of Appeals making the case that Kalshi's sports betting violates state gaming regulations.Earlier on Wednesday, a federal judge denied Polymarket U.S. in its motion trying to block Michigan from suing the platform. Such court actions have become frequent as the industry makes its legal defense, and most observers expect the matter to rise to the U.S. Supreme Court for eventual resolution.12345678910