CFTC Sues Kentucky over 14.25% Prediction Market Tax, Ninth State Targeted

According to The Block, on Tuesday (June 22), the U.S. Commodity Futures Trading Commission sued Kentucky, claiming it has exclusive jurisdiction over prediction markets and that the state's regulatory efforts unlawfully intrude on federal authority. Kentucky is the ninth state sued by the CFTC in its push to establish federal oversight of the industry.

The dispute stems from Kentucky's legislation requiring prediction market platforms including Kalshi and Polymarket to pay a 14.25% tax on transaction fees. The CFTC contends this tax requirement "essentially makes it impossible for prediction markets to operate in Kentucky." The state originally sued the platforms last week for allegedly operating unlicensed gambling services, prompting the CFTC's countersuit.