The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Kentucky lawmakers to halt efforts looking to “shut down” event contract trading and regulate prediction markets at the state level.
“Kentucky is the latest state attempting to shut down federally regulated event contracts. Prediction markets provide Kentuckians with valuable information about the likelihood of future events and offer risk management products relied on by Kentucky businesses and individuals,” CFTC Chairman Michael Selig said.
“As I’ve consistently pledged, the CFTC is firmly committed to maintaining its exclusive jurisdiction over prediction markets, and today’s lawsuit against Kentucky is yet another example of the Commission protecting its federal interests.”
Kentucky Attorney General Russell Coleman previously filed lawsuits against Kalshi, Polymarket and VGW, accusing each of operating unlicensed sportsbooks under the guise of “event contracts” which violate state gambling laws.
Representing the ninth US state the CFTC has filed enforcement action against, Kentucky also marks the first time the Commission has sued a Republican Attorney General.
According to the CFTC, Kentucky lawmakers recently implemented a “special transaction fee” on CFTC-regulated designated contract markets to “encourage these platforms to shut down in the state.”
“Kentucky’s effort to restrict the functioning of CFTC-registered exchanges obstructs Congress’ decision to federally preempt state law,” the CFTC said.
The Commission also confirmed it has initiated legal proceedings in Minnesota, Illinois and Rhode Island, as well as submitted amicus briefs to the US Court of Appeals and Supreme Judicial Court of Massachusetts.
On June 12, the CFTC filed a lawsuit against the state of New Mexico, seeking a permanent injunction to prevent legislators from enforcing preempted state laws against its registrants.
In addition to the permanent injunction request, the CFTC is also seeking a declaratory judgment that federal law grants it exclusive authority to regulate event contracts.
Novig received designation from the CFTC as a DCM on June 16, providing authorization to operate a federally regulated prediction market and expand under a single regulatory framework
