Kentucky Attorney General Takes Legal Fight to Prediction Markets, Sweepstakes

• Kentucky Attorney General Russell Coleman filed two lawsuits against prediction market operators and one against a sweepstakes company
• Coleman filed lawsuits against both Kalshi and Polymarket for alleged illegal sports betting in the Bluegrass State
• He also filed a lawsuit against VGW for operating an alleged unlawful sweepstakes casino in the state

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Kentucky Attorney General Russell Coleman has taken a big legal swing against alleged illegal sports betting and online gambling in the Bluegrass State.

Coleman filed lawsuits on June 17 in Franklin Circuit Court against prediction market operators Kalshi and Polymarket, plus a third lawsuit against VGW, an online casino platform operating Chumba Casino, Global Poker, and LuckyLand Slots.

“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said in a press 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…”

Running Afoul of State Gambling Laws

All three lawsuits allege the companies run afoul of Kentucky’s Consumer Protection law, the Loss Recovery Act and the Commonwealth’s gambling laws

According to Coleman and the filed lawsuits, Kalshi and Polymarket are operating illegal sports betting in the state without a Kentucky gaming license or following state regulations. Coleman noted both Kalshi and Polymarket advertising in the state provides the “false and misleading impression that it is authorized to offer sports wagering under Kentucky law.”

Both Kalshi and Polymarket, he said, bypass Kentucky consumer protection and tax requirements mandated by the commonwealth’s gambling laws.

The attorney general noted in the lawsuits that Polymarket and Kalshi, plus its affiliated entities, Coinbase, Robinhood and Webull, offer users few or no resources to identify or seek help for a gambling problem, which is mandated under Kentucky law.

“While Defendants offer sports wagering to anyone over the age of 18, after a simple sign-up process, Defendants provide few, if any, safeguards to educate users about financial responsibility or the risks of losing money,” Coleman wrote in the lawsuits.

The lawsuits request temporary and permanent injunctive relief against Kalshi and Polymarket, while also granting Kentucky all recoverable measures of damages.

Taking Aim at Sweepstakes

Additionally, Coleman filed a third lawsuit against VGW and its affiliates for operating an alleged unlawful sweepstakes casino website that uses two different types of virtual gambling chips. The games are designed to look and feel like traditional casino games, he noted, such as slot machines and blackjack.

“This company may use new technology and a new scheme to hide, but the reality is the same,” Coleman said in a press release. “Our Office has a duty to stop illegal gambling in Kentucky regardless of how it’s packaged.”

Users pay real money for “sweeps coins” to use on these games, Coleman reported, like gamblers playing for poker chips at casino.

“The Sweepstakes Casinos also deceptively portray their offerings to both regulators and consumers as harmless video games when, in fact, they are illegal online casinos that, as detailed below, cause great harm to the Commonwealth and its citizens. Accordingly, the Commonwealth brings this lawsuit to recover its citizens’ losses, and to shut down these illegal websites,” Coleman wrote in the lawsuit.