Kentucky Attorney General Russell Coleman, a Republican and former Trump-nominated U.S. attorney, has sued prediction market firms Kalshi and Polymarket, accusing them of offering illegal sports betting without a license. The suit adds Kentucky to a growing list of states challenging the industry, but with a twist: Kentucky voted for Donald Trump by a 64% majority in 2024, and the president has firmly backed the firms and their federal regulator against exactly this kind of state action.
A Red State Defies the White House
Coleman’s office said in a Wednesday statement that Kalshi, Polymarket and their partners, naming Coinbase, Robinhood and Webull, are not licensed for gaming in the state and fail to offer resources for people with gambling problems as local law requires. “Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said, adding that the companies and what he called their legal fictions “don’t pass the sniff test.”
Trump has come down firmly on the other side. In a recent post on Truth Social, he wrote that it is critically important that the CFTC’s exclusive authority over prediction markets is maintained, praised CFTC Chairman Mike Selig, and attacked state-level opponents, naming Democratic governors, in unusually blunt terms. The result is a rare case of a deep-red state working against a policy the president has personally championed, though the split is not purely partisan: the suit comes from the Republican attorney general, while Kentucky’s governor, Andy Beshear, is a Democrat.
What Is at Stake
Platforms like Kalshi and Polymarket let users bet on the outcomes of real-world events, and the fight over who polices them is now playing out across multiple states and courts. Kentucky’s lawsuit lands it on the opposite side from a president who has personally defended the firms.
- The CFTC, led by Chairman Mike Selig as its sole sitting commissioner, has sued eight states so far, most recently New Mexico, arguing event contracts fall under its authority over U.S. derivatives.
- A Polymarket spokesperson said the company looks forward to addressing the claims and argued Kentucky’s action runs counter to the CFTC’s established framework.
- The federal position has critics from Trump’s own orbit: his former chief of staff Mick Mulvaney now runs a group opposing prediction markets as an end-run around state gambling laws.
- Former SEC and CFTC chair Gary Gensler recently filed a brief arguing Kalshi’s sports betting violates state gaming regulations.
- Earlier Wednesday, a federal judge denied Polymarket’s bid to block Michigan from suing it, and most observers expect the question to reach the U.S. Supreme Court.
Broader Regulatory Tension
For now, the fight is unfolding state by state and court by court, with a red state’s attorney general and a Republican president landing on opposite sides of the same question.
