Kentucky Attorney General Russell Coleman has launched a series of lawsuits against prediction market operators Kalshi and Polymarket, as well as sweepstakes casino company VGW, alleging that the businesses are offering unlicensed gambling products within the state.
The three actions were filed on June 17 in Franklin Circuit Court. Coleman’s office claims the companies violated Kentucky consumer protection laws, the state’s Loss Recovery Act and recently adopted rules connected to prediction market activity. The lawsuits seek court orders preventing the companies from continuing operations in Kentucky and request civil penalties and restitution.
The latest legal action arrives only days after a coalition of prediction market companies challenged Kentucky’s newly enacted tax framework for event contracts, setting the stage for a broader dispute over regulation and taxation in the sector.
State Challenges Sports-Related Contracts
Kentucky argues that prediction market platforms offer products that function like sports betting while operating outside the state’s licensing structure.
“Our office has a duty to stop illegal gambling in Kentucky regardless of how it’s packaged,” Coleman said.
Prediction market operators allow users to trade contracts linked to real-world outcomes, including sports events. State officials contend that contracts involving game winners, point spreads and player statistics resemble traditional sportsbook offerings.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said in the release. “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test. As one of our state legislative leaders said it best, ‘If it looks like a duck and quacks like a duck…’”
The attorney general’s office also claims the platforms provide limited resources for identifying and addressing gambling addiction concerns.
New Laws and Penalties at Issue
Kentucky sports wagering licenses are limited to licensed horse racing associations and regulated by the Kentucky Horse Racing and Gaming Commission.
House Bill 904, which takes effect on July 15, restricts licensed sports betting operators from partnering with Kalshi and Polymarket. The lawsuits seek penalties of up to $2,000 per violation of the Kentucky Consumer Protection Act and an additional $10,000 for violations involving individuals over age 60.
Kentucky has also joined broader efforts by state officials to support greater state oversight of sports-related prediction contracts.
VGW Faces Separate Sweepstakes Casino Claims
A third lawsuit targets VGW and affiliated brands, including Chumba Casino, Global Poker and LuckyLand Slots. The state alleges the company operates unlawful sweepstakes casino products through a dual-currency model involving virtual coins that can hold cash value.
“This company may use new technology and a new scheme to hide, but the reality is the same,” Coleman said.
VGW disputed the allegations, stating: “We respectfully reject the Kentucky Attorney General’s claims and plan to vigorously defend this lawsuit.”
The legal actions follow a separate lawsuit filed by the Coalition for Fair Markets, whose members include Kalshi, Polymarket and Crypto.com. The coalition is attempting to block Kentucky’s new 14.25% excise tax on prediction market transaction fees, arguing that the measure is discriminatory, unconstitutional and preempted by federal derivatives law.
Source:
“Kentucky AG sues Kalshi, Polymarket for running ‘illegal gambling’ platforms”, kentucky.com, Jun 17, 2026
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