Coalition sues over Kentucky’s 14.25% prediction market tax
A coalition of prediction market companies is suing Kentucky over its tax rate. (Photo illustration by Getty images)
A coalition of prediction market companies including Polymarket and Kalshi is suing to block Kentucky’s recently enacted tax on prediction markets.
The lawsuit filed in Franklin Circuit Court by the Coalition for Fair Markets — which represents prediction market companies where people can wager on the outcomes of events, including sports games — calls the 14.25% excise tax on prediction markets unconstitutional and discriminatory.
Republican Kentucky Attorney General Russell Coleman in a statement said he would defend the tax and Kentuckians “from out-of-state companies that seek to cancel Kentucky’s sports betting laws.”
“In any courtroom, the attorneys with the AG’s Office are the odds-on favorite to win,” Coleman said. “Together with the policymakers in the General Assembly and the regulators at the Kentucky Horse Racing and Gaming Commission, we are well-positioned to protect this Commonwealth, just like we’ve been doing for over a century.”
The Kentucky General Assembly passed the tax on prediction market transactions through House Bill 757 during this year’s regular legislative session. The new tax was among numerous other provisions in the sprawling 386-page bill, a piece of legislation that ballooned in size in the final days of the session.
Sen. Chris McDaniel, R-Ryland Heights, the chair of the Kentucky Senate Appropriations and Revenue Committee, had told reporters in April lawmakers aimed to tax companies such as Polymarket, not commodities markets. Prediction markets and commodity markets are regulated by the federal Commodity Futures Trading Commission.