FRANKFORT, Ky. (AP) — A coalition that includes Kalshi, Crypto.com and Polymarket filed a lawsuit Friday challenging Kentucky's first-in-the-nation excise tax on prediction markets.
The Kentucky General Assembly in April enacted a 14.25% tax on prediction market operators' transaction fees, a levy the lawsuit says is discriminatory, unconstitutional and preempted by federal law.
Prediction markets are platforms where customers can buy, sell or trade event contracts — a form of derivative that allow placing trades based on whether real-world events, such as election results or economic indicators, will or won't happen.
The new tax is higher than for Kentucky's “favored incumbent industry,” the lawsuit filed in state court by the Coalition for Fair Markets says, noting a 9.75% tax on wagers at horse tracks.
In a statement using gambling terminology, Kentucky Attorney General Russell Coleman vowed to fight the legal challenge.
“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," he said. “In any courtroom, the attorneys with the AG’s Office are the odds-on favorite to win.”
The tax disincentivizes the operation of prediction markets in Kentucky, the lawsuit says.
“No 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," it says.
Taxing federally regulated markets “just pushes people toward illegal platforms with no oversight and no protections,” Kalshi said in a statement. "Kalshi is an American company, regulated here at home, and we’re joining the fight for Kentuckians’ access to safe, legal markets.”
Prediction markets have been pushing hard to gain legitimacy among the public and policymakers as a legitimate platform where users can bet on everything from sports to the weather to geopolitical events.
There have been several incidents where traders have used inside information to profit on prediction market platforms. It was recently disclosed that former former Congressman George Santos was under investigation for allegedly illegally betting he wouldn’t attend President Donald Trump’s State of the Union address after initially saying he would. In April, a U.S. 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 earlier this year.
FILE - The prediction market app Polymarket is displayed on a mobile phone Thursday, April 16, 2026, in Chicago. (AP Photo/Erin Hooley, File)
FILE - The logo for crypto.com appears on a mobile phone and computer screen, in New York, Jan. 31, 2023. (AP Photo/Richard Drew, File)
FILE - An ad for the prediction market app Kalshi is displayed on a mobile phone on April 16, 2026, in Chicago. (AP Photo/Erin Hooley, File)
CAIRO (AP) — The White House on Friday signaled that President Donald Trump is weighing carrying out new strikes on Iran as the U.S. presses for Tehran to reopen the Strait of Hormuz and abide by terms set out in a truce agreement the two sides forged last month only to quickly collapse.
There were no U.S. strikes on Iran overnight, but Iran’s paramilitary Revolutionary Guard said it had struck another two tankers in the Strait of Hormuz, and Kuwait said it intercepted drones.
Meanwhile, Hamas confirmed Friday that it will disarm in a potential breakthrough for ending the war in Gaza, but major obstacles remain.
Here are the most important developments across the Middle East today:
White House press secretary Karoline Leavitt expressed the U.S. administration’s frustration anew, charging that Tehran last month signed a memorandum of understanding with the U.S. on a truce but then quickly “broke it, shot at commercial ships, and killed American soldiers.”
“President Trump is not going to stand by and allow this terrorist behavior to occur,” Leavitt said in a statement on Friday evening. “Iran will continue to pay until they come to the table in, what President Trump deems, a meaningful way.”
Leavitt issued the fresh warning after Trump earlier on Friday told reporters that “we just want to win” in Iran and signaled that he expected U.S. military action to continue for some time.
“We’ll be hitting them very hard,” Trump said in an exchange with reporters during a meeting with members of his Cabinet at the Camp David presidential retreat in Maryland. “You know, at some point they’re going to say, ‘We just can’t take it anymore.’”
Iran fired drones at Kuwait, a Gulf country hosting U.S. forces, and said it had also fired at oil tankers in the Strait of Hormuz, a key waterway for global oil and gas shipments, which has been largely closed by the fighting.
Kuwait’s Defense Ministry said Friday its armed forces had shot down drones inside Kuwaiti airspace. It said the Iranian attacks had targeted several vital military facilities, causing material damage from falling shrapnel but no casualties. It did not specify how many drones were intercepted. Iranian state media said Iran had targeted an air base in Kuwait with drones in retaliation for U.S. strikes on Thursday.
Iran’s Revolutionary Guard claimed to have hit two oil tankers attempting to pass through the Strait of Hormuz. Iranian state media said four other tankers had turned around. The report did not provide further details on the tankers’ ownership, or whether there were any casualties.
Hamas said it will begin disarming as part of a deal announced by Trump that also requires Israel to end its strikes and withdraw from Gaza.
Hamas also said that laying down its heavy weapons, which would come later in the process, was contingent on the creation of a Palestinian state, something Israel’s current government adamantly rejects.
Reflecting the hurdles of the potential disarmament, a series of Israeli airstrikes shook Gaza again on Friday, killing at least one Palestinian and wounding at least four, including a child, according to officials in hospitals near the attacks. The Israeli military did not immediately respond to a request for comment.
United Nations Secretary-General Antonio Guterres welcomed the agreement, calling it the only good news in recent days from a troubled region. The deal must be implemented “without any questions, skepticism, or determination to undermine it,” he told reporters.
Israel has not officially commented on the Hamas deal, which is part of a U.S.-brokered ceasefire announced last October. That agreement called for Hamas to disarm and hand over power to an independent Palestinian administration. Israel was to withdraw and an International Stabilization Force was to be deployed.
But progress stalled, with Israel saying everything hinged on Hamas disarming, and Hamas accusing Israel of violating the agreement by continuing to carry out regular strikes on Gaza.
The war in Gaza began after the Hamas-led attack on southern Israel on Oct. 7, 2023, killed around 1,200 people and saw 251 taken hostage. Israel’s retaliatory offensive in Gaza has killed more than 73,000 Palestinians, including those killed since the ceasefire, Gaza’s Health Ministry says.
The Associated Press is tracking the progress of Trump's plan to end the Israel-Hamas war.
Madhani reported from Washington and Becatoros contributed from Athens, Greece. Associated Press writer Fatma Khaled contributed to this report from Cairo.
A Palestinian man rides his bicycle by the rubble of buildings that were destroyed during the Israel Hamas war, in Khan Younis, southern Gaza Strip, Friday, July 31, 2026. (AP Photo/Abdel Kareem Hana)
