When global prediction market platforms have extended their reach to political elections, economic indicators, and professional sports events, the Kentucky Derby, the most anticipated event on the American annual gambling calendar, remains a forbidden area for them. As of this Thursday, neither Kalshi nor Polymarket, two leading platforms, have launched any trading contracts linked to this event. Polymarket briefly introduced related contracts but quickly withdrew them after direct contact from Churchill Downs Inc. Churchill Downs spokesperson Blake Thomas-Ross was straightforward: "We contacted Polymarket and asked them to withdraw the betting project, and Polymarket did so." Since expanding to sports-related contracts at the beginning of 2025, Kalshi has also not launched any Kentucky Derby-related markets in recent years and has refused to clarify whether there are plans to do so.
Barriers Built by the 1978 Federal Law
The core weapon in this standoff is not a public relations offensive, but the Interstate Horseracing Act of 1978. This federal law grants the right to operate horse racing betting to racetracks and related entities. Bill Castanjen, CEO of Churchill Downs, pointed out that pari-mutuel horse racing betting operates under this federal umbrella regulation, granting the company a series of rights based on the content of the event—essentially equivalent to intellectual property rights. Any platform—whether it's a sports betting platform, another horse racing platform, or a prediction market platform—must obtain explicit consent from the company to accept bets, and the company has not yet agreed to provide content to prediction markets. Tom Rooney, chairman and CEO of the National Thoroughbred Racing Association, left a slight possibility open, stating that it might be a door that could be opened, but there is no such possibility at the moment.
More critically, Rooney had already sent a letter to the Commodity Futures Trading Commission earlier this year, warning that offering horse racing contracts without approval might violate federal law and cause substantial economic damage to the horse racing industry. This viewpoint directly challenges the core defense of prediction market platforms that classify themselves as commodity derivatives trading rather than gambling. In other sports, Kalshi and Polymarket can challenge state gambling laws through the CFTC's federal regulatory framework, but the horse racing field has an additional layer of specialized federal protection, making the legal terrain of this gambling dispute far more complex than other sports betting disputes.
Derby Week Betting Exceeds Four Hundred Million in Business Model
The horse racing industry defends the baseline of the traditional betting system, built on a fragile business model. Last year, the Kentucky Derby alone generated more than $234 million in bets, while the total betting amount for the series of events at Churchill Downs during Derby week climbed to over $470 million. These funds are injected into the horse racing ecosystem through statutory distribution channels—a fixed percentage of each dollar is allocated for taxes, prizes, track operations, and thoroughbred breeding programs. With the number of horse races in the United States decreasing by nearly five percent last year and the total betting amount shrinking by two percent, the intervention of prediction markets could further weaken the collective participation foundation of the pari-mutuel model, leading to reduced prizes and diminishing the attractiveness of major events. Churchill Downs has further consolidated its influence in the traditional betting field by acquiring the rights to the Preakness Stakes.
PASA Official Website continues to track the legal dynamics of global prediction markets and sports betting, noting that the absence of the Kentucky Derby is not only a jurisdictional dispute over a single event but also reflects the multi-layered legal barriers encountered by prediction markets in their expansion process.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel: https://t.me/pasa_news
Original in-depth gambling channel: https://t.me/gamblingdeep
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PASA Matrix: @pasa002_bot
PASA Official Website: https://www.pasa.news
