Kentucky becomes the ninth state in CFTC’s lawsuit over prediction market regulatory disputes

Odaily reported that the U.S. CFTC on Tuesday sued Kentucky, attempting to prevent the state from regulating prediction market platforms as illegal sports betting and gambling operations, further establishing federal jurisdiction over prediction markets.

Previously, Kentucky had last week sued platforms including Kalshi and Polymarket, accusing them of operating unlicensed illegal sports betting and gambling businesses within the state.

In its complaint filed with the U.S. District Court for the Eastern District of Kentucky, the CFTC stated that Kentucky’s attempt to shut down federally regulated designated contract markets interferes with the federal regulatory system established by Congress for the national swaps market. The agency claims "exclusive jurisdiction" over event contracts and prediction market products.

Kentucky has become the ninth state that the CFTC has sued in the prediction market regulatory dispute, indicating that the conflict between federal derivatives regulation and state-level gambling oversight continues to escalate.