Kalshi, Polymarket-Led Coalition Sues Kentucky Over 14.25% Prediction Market Tax Enacted in April

According to Abcnews, an industry coalition led by Kalshi and Polymarket has filed a lawsuit to block Kentucky's 14.25% transaction tax on prediction markets. The tax was enacted by the state legislature in April and applies a 14.25% consumption tax on prediction market operators' trading fees, marking the first state-level tax targeting the industry in the United States.

The lawsuit, filed by the "Fair Markets Coalition," argues that the tax is discriminatory, violates the U.S. Constitution, and may be preempted by federal law. The coalition contends that prediction markets face disproportionately higher tax burdens compared to other industries, which could distort market competition.