CFTC sues Kentucky over actions against prediction markets
The sign is seen outside the Commodity Futures Trading Commission headquarters in Washington on August 30, 2020.
Andrew Kelly | Reuters
The Commodity Futures Trading Commission said Tuesday it would file a lawsuit against Kentucky. The action came after the state filed a lawsuit prediction market platforms Kalshi and Polymarket alleged that the companies were operating illegal gambling platforms.
Kentucky becomes the ninth state the CFTC has sued in its fight to defend what the agency says is its exclusive jurisdiction to regulate prediction markets. Front Office Sports He was the first to report the federal government’s lawsuit on Tuesday.
“Kentucky is the latest state to seek to shut down federally regulated event conventions,” said CFTC Chairman Michael Selig. Press release announced the case. “As I have repeatedly pledged, the CFTC is committed to maintaining its exclusive jurisdiction over prediction markets, and today’s lawsuit against Kentucky is another example of the Commission protecting federal interests.”
Kentucky, in particular, became the first state with a Republican attorney general to be sued by the commission. The only states the commission had previously sued were those that had filed suit against Democratic attorneys general, even though both political parties were pursuing platforms.
In total, 20 states are actively involved in lawsuits against prediction market platforms. Someone even moved to ban them.
States argue that they have the right to regulate these platforms because of the sports-related event contracts they regulate, which they see as similar to sports betting. However, the CFTC argues that these contracts are bartered and therefore fall within its jurisdiction.
“Kalshi and Polymarket operate illegal sports betting sites in Kentucky and violate our laws,” Kentucky Attorney General Russell Coleman said in a press release last week announcing the lawsuit against the two companies.
“These multibillion-dollar corporations and their legal fictions do not pass the sniff test,” he said. “As one of our state legislative leaders said it best, ‘If it looks like a duck and quacks like a duck…’
Coleman’s office did not immediately respond to the CFTC’s request for comment on the case.
Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and minority investment.
