Key Takeaways
- State gaming officials anticipate Kentucky’s attorney general will pursue enforcement action against prediction market platforms in the near future
- Churchill Downs successfully pressured Polymarket to discontinue Kentucky Derby betting contracts
- Coleman joined a coalition of 40 state attorneys general calling on federal regulators to prevent sports-related prediction market offerings
- New legislation prohibits state-licensed sportsbooks from providing prediction market services and establishes a 14.25% revenue tax
- Gaming regulators approved Plannatech’s acquisition of bankrupt Prime Sports and its online betting license
During a Tuesday board session, the Kentucky Horse Racing and Gaming Corporation’s chairman indicated that state enforcement action targeting prediction markets appears imminent.
Jonathan Rabinowitz shared these expectations with board members just one day following Attorney General Russell Coleman’s social media commentary about prediction market platforms.
“My office has held several discussions with the attorney general regarding these platforms, and I wouldn’t be surprised to see state action within the next couple of months,” Rabinowitz stated.
This announcement follows Polymarket’s short-lived offering of Kentucky Derby contracts, which the platform withdrew at Churchill Downs’ request. The removal occurred fewer than 14 days prior to Tuesday’s regulatory meeting.
Rabinowitz emphasized horse racing oversight as a definitive boundary. He explained that Kentucky’s regulatory jurisdiction over the racing industry prevented any prediction market from accepting Derby wagers.
Coleman has previously demonstrated his position on this matter. Earlier last month, he co-signed correspondence to the U.S. Commodity Futures Trading Commission alongside chief legal officers from 39 additional states plus Washington, D.C.
The correspondence called on the CFTC to block prediction market companies from hosting sports-related contracts. State officials additionally requested that the federal agency defer sports wagering oversight to individual state authorities.
Understanding the Distinction Between Prediction Markets and Traditional Betting
As the CFTC evaluates potential regulations that might permit sports-related prediction markets, the agency has collected approximately 2,000 public submissions. Prediction markets function as peer-to-peer exchanges connecting individual participants, whereas traditional sportsbooks accept wagers directly and generate profits from unsuccessful bets.
Prediction market companies derive income through fees and transaction charges. Several operators also maintain proprietary market-making divisions that supply liquidity while creating supplementary revenue streams.
Kalshi and Crypto.com have provided sports-related markets for more than twelve months without facing CFTC enforcement measures. Their sports market expansion followed judicial decisions permitting Kalshi to host election and political outcome contracts.
CFTC Chairman Michael Selig, selected by President Trump, has openly endorsed prediction market operators entering the sports sector.
This sector expansion prompted leading sportsbook companies DraftKings, Fanatics, and FanDuel to launch prediction market offerings in jurisdictions where they lack traditional sportsbook authorization.
State Legislators Have Already Responded
Kentucky’s General Assembly acted during the legislative session that concluded last month. apps.legislature.ky.gov/record/26rs/hb904.html prevents state-authorized sportsbooks from providing prediction market services within Kentucky’s borders.
Legislators additionally enacted separate legislation imposing a 14.25% adjusted revenue tax on prediction market companies. This rate mirrors the assessment applied to Kentucky’s internet sportsbooks.
Should the attorney general proceed with enforcement, Kentucky would become the sixth state joining Ohio, Massachusetts, Maryland, Nevada, and Washington in challenging prediction market operators.
In additional Tuesday proceedings, the KHRGC members voted unanimously to authorize Plannatech’s purchase of Prime Sports along with its digital sports wagering license. Prime Sports commenced Kentucky operations on July 28, 2025, before entering Chapter 11 bankruptcy proceedings in November.
A revised restructuring proposal submitted last month identified Plannatech as the prospective owner subject to regulatory clearance. Plannatech currently maintains an information services provider license in Kentucky through its role as Prime’s technology and risk oversight contractor.
KHRGC sports betting director Hannah Simms informed board members that the license transition awaits the bankruptcy court’s final ruling. Prime Sports maintains active operations in New Jersey and Ohio, while Plannatech conducts Arizona operations under the Betcris brand name.
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