FRANKFORT, Ky. (AP) — A coalition that includes Kalshi, Crypto.com and Polymarket filed a lawsuit Friday challenging Kentucky’s first-in-the-nation excise tax on prediction markets. The Kentucky General Assembly in April enacted a 14.25% tax on prediction market operators’ transaction fees, a levy the lawsuit says is discriminatory, unconstitutional and preempted by federal law. Prediction markets are platforms where customers can buy, sell or trade event contracts — a form of derivative that allow placing trades based on whether real-world events, such as election results or economic indicators, will or won’t happen.The new tax is higher than for Kentucky’s “favored incumbent industry,” the lawsuit filed in state court by the Coalition for Fair Markets says, noting a 9.75% tax on wagers at horse tracks.In a statement using gambling terminology, Kentucky Attorney General Russell Coleman vowed to fight the legal challenge.
“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. “In any courtroom, the attorneys with the AG’s Office are the odds-on favorite to win.”
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