Kalshi, Crypto.com and Polymarket Sue Kentucky Over 14.25% Prediction Market Tax
Updated
Updated · Los Angeles Times · Jun 13
Kalshi, Crypto.com and Polymarket Sue Kentucky Over 14.25% Prediction Market Tax
3 articles · Updated · Los Angeles Times · Jun 13
Summary
A coalition including Kalshi, Crypto.com and Polymarket filed suit Friday in Kentucky state court to block a new 14.25% excise tax on prediction market operators’ transaction fees.
The complaint calls the levy discriminatory, unconstitutional and preempted by federal law, arguing no other state imposes a state-specific excise tax on derivatives traded on a federally designated exchange.
The suit says Kentucky is taxing prediction markets more heavily than horse-track wagers, which face a 9.75% rate, and warns the higher burden will deter legal operators and push users toward unregulated platforms.
Kentucky Attorney General Russell Coleman said his office would defend the law as part of the state’s sports-betting framework, casting the challengers as out-of-state companies targeting Kentucky statutes.
The fight lands as prediction markets seek broader legitimacy while facing scrutiny over insider-trading cases, including a former Army soldier charged after allegedly making $400,000 on Polymarket using classified information.