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According to ABC News, the Coalition for Fair Markets, composed of Kalshi, Polymarket, and others, has filed a lawsuit in Kentucky state court challenging the state's newly implemented 14.25% prediction market sales tax. The lawsuit states that this tax rate is higher than the 9.75% tax rate on local horse racing betting, constituting discriminatory treatment and being limited by the principle of federal law precedence. The plaintiffs argue that this tax will suppress the development of federally regulated prediction markets and may push users toward unregulated illegal platforms. Kentucky has stated that it will defend the relevant laws.