Group sues to block Kentucky’s new ‘discriminatory’ betting tax
A Washington-based lobbying group is suing Kentucky to challenge a recently enacted law that places an excise tax on prediction markets.
The Coalition for Fair Markets filed a lawsuit Friday in Franklin County that alleges Kentucky’s first-in-the-nation law unfairly discriminates against their operation.
The lawsuit lists Attorney General Russell Coleman, the commissioner of the Kentucky Department of Revenue and state horse racing gaming corporation, as defendants.
Kentucky’s General Assembly enacted a 14.25% on prediction market transaction fees, which the coalition claims is discriminatory and violates federal law.
“Kentucky’s new law not only targets federally regulated conduct but also discriminates against activity subject to exclusive federal control in multiple ways,” the lawsuit reads.
Prediction markets are a platform in which participants can buy, trade or sell event contracts — a type of trade that allows bettors to wage on whether real-world events will or will not take place.
For example, a person could bet on election results, whether a politician will attend an event or corporate announcements.
The Coalition for Fair Markets is a lobbying group that works towards and promotes “access to safe, transparent and integrity driven prediction markets in the United States,” their website says.
Kentucky’s law, enacted in April, levies a 14.25% tax on all transaction fees on companies like Kalshi, Polymarket and Cryto.com that operate within state borders and include customers in the state’s limits.
The coalition says the law is discriminatory because the tax placed on event contracts is higher than on other gambling operations, including the horse industry.
“Yet, here, Kentucky’s tax sets a higher rate on prediction markets than for the Commonwealth’s favored incumbent industry (14.25% on prediction markets but 9.75% tax on wagers at horse tracks),” the lawsuit reads.
The lawsuit argues that the state’s tax violates federal law, as well as Kentucky’s Constitution.
Coleman said his office would defend the statute in an effort to protect Kentuckians from out-of-state companies.
“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,” Coleman said in an emailed statement. “In any courtroom, the attorneys with the AG’s Office are the odds-on favorite to win.”
This story was originally published June 15, 2026 at 12:47 PM.
