CFTC Sues Kentucky in Growing Prediction Market State Scramble

The federal agency that regulates derivatives trading sued Kentucky on Tuesday, claiming the state led by a mixed Democratic-Republican governor and attorney general is overstepping on its turf, the newest legal scuffle for control of the booming prediction markets industry.

Kentucky’s Republican Attorney General Russell Coleman last week brought enforcement actions against several prediction market players, among them Kalshi Inc. and Polymarket, alleging they’re offering unlicensed sportsbooks in violation of state laws.

The CFTC, in its complaint along with the Justice Department Tuesday, called Kentucky’s suits the latest in the state’s “campaign to banish prediction markets from within their borders,” ...