Coalition sues to block Kentucky prediction markets tax

2 min readUpdated June 13, 2026

A coalition of prediction market operators filed a lawsuit in state court challenging a first-of-its-kind Kentucky excise tax on prediction market transaction fees, according to The Associated Press.

Passed by the Kentucky General Assembly this past April, the 14.25% tax drew a legal challenge from the Coalition for Fair Markets, whose members include Kalshi, Crypto.com, and Polymarket. Central to the complaint is a comparison with what the plaintiffs describe as a "favored incumbent industry": horse racing, which faces only a 9.75% tax on wagers, according to the AP.

Amazon's cloud business grew 37% as quarterly revenue topped $200 billion

Kalshi said in a statement that taxing federally regulated markets "just pushes people toward illegal platforms with no oversight and no protections," according to the Los Angeles Times.

Leaning into gambling metaphors, Kentucky Attorney General Russell Coleman issued a defiant response to the suit. "You can bet our Office will defend these statutes and the people of our Commonwealth from out-of-state companies that seek to cancel Kentucky's sports betting laws," he said, according to the AP. "In any courtroom, the attorneys with the AG's Office are the odds-on favorite to win."

The litigation emerges against a backdrop of growing concern about insider trading on prediction platforms. Among the cases drawing attention: a U.S. Army soldier who faced charges in April after allegedly exploiting classified intelligence to pocket $400,000 on Polymarket through trades tied to American military activity in Venezuela. Separately, former Rep. George Santos has come under scrutiny for reportedly wagering on whether he would skip President Donald Trump's State of the Union address after publicly indicating he would attend, according to the AP.

Prediction market operators challenge Kentucky's novel 14.25% excise tax in court

Related Content

Related Content