FRANKFORT, Ky.\u00a0\u2014\u00a0A coalition that includes Kalshi, Crypto.com and Polymarket filed a lawsuit Friday challenging Kentucky\u2019s first-in-the-nation excise tax on prediction markets. <\/p>\n
The Kentucky General Assembly in April enacted a 14.25% tax on prediction market operators\u2019 transaction fees, a levy the lawsuit says is discriminatory, unconstitutional and preempted by federal law. <\/p>\n
Prediction markets are platforms where customers can buy, sell or trade event contracts \u2014 a form of derivative that allows placing trades based on whether real-world events, such as election results or economic indicators, will or won\u2019t happen.<\/p>\n
The new tax is higher than for Kentucky\u2019s \u201cfavored incumbent industry,\u201d the lawsuit filed in state court by the Coalition for Fair Markets says, noting a 9.75% tax on wagers at horse tracks.<\/p>\n
In a statement, Kentucky Atty. Gen. Russell Coleman vowed to fight the legal challenge. <\/p>\n
\u201cYou can bet our Office will defend these statutes and the people of our Commonwealth from out-of-state companies that seek to cancel Kentucky\u2019s sports betting laws,\u201d he said. \u201cIn any courtroom, the attorneys with the AG\u2019s Office are the odds-on favorite to win.\u201d<\/p>\n
The tax disincentivizes the operation of prediction markets in Kentucky, the lawsuit says. <\/p>\n
\u201cNo State currently levies a State-specific excise tax of any kind on derivatives transactions that take place on a federally designated exchange, let alone the sort of specifically targeted and discriminatory tax that Kentucky has imposed here,\u201d it says.<\/p>\n
Taxing federally regulated markets \u201cjust pushes people toward illegal platforms with no oversight and no protections,\u201d Kalshi said in a statement. \u201cKalshi is an American company, regulated here at home, and we\u2019re joining the fight for Kentuckians\u2019 access to safe, legal markets.\u201d<\/p>\n
Prediction markets have been pushing hard to gain legitimacy among the public and policymakers as a legitimate platform where users can bet on a multitude of events, from sports to the weather to geopolitical matters.<\/p>\n
There have been several incidents where traders have used inside information to profit on prediction market platforms. It was recently disclosed that former Rep. George Santos (R-N.Y.) was under investigation for allegedly illegally betting he wouldn\u2019t attend President Trump\u2019s State of the Union address after initially saying he would. <\/p>\n
In April, an Army soldier was charged with using classified information to make a $400,000 profit trading on Polymarket on the timing of the U.S. military operations in Venezuela in January.<\/p>\n","protected":false},"excerpt":{"rendered":"FRANKFORT, Ky.\u00a0\u2014\u00a0A coalition that includes Kalshi, Crypto.com and Polymarket filed a lawsuit Friday challenging Kentucky\u2019s first-in-the-nation excise tax…\n","protected":false},"author":2,"featured_media":359676,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[146382,146381,146384,146383,1776,11792,544,48,52,51,38678,47,50,49,592,31830,77475,77478,7496,16050,1747],"class_list":["post-359675","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-prediction-market-tax","tag-coalition-sue","tag-derivative","tag-first-in-the-nation-excise-tax","tag-information","tag-kalshi","tag-kentucky","tag-la","tag-la-headlines","tag-la-news","tag-lawsuit-friday","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-people","tag-platform","tag-prediction-market","tag-real-world-event","tag-sport","tag-state-court","tag-tax"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/359675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=359675"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/359675\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/359676"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=359675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=359675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=359675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}