Published on: June 21, 2026, 12:06h.
Updated on: June 21, 2026, 12:06h.
- Kentucky’s Attorney General Russell Coleman has initiated legal action against Kalshi, Polymarket, and VGW, claiming they are involved in illegal gambling activities.
- The lawsuits aim to secure judicial orders to stop contracts related to sports events and sweepstakes casinos in the state.
- Kalshi, Polymarket, and VGW refute the allegations, asserting their business practices are legitimate.
Kentucky Attorney General Russell Coleman has launched a lawsuit targeting three companies accused of operating illegal gambling platforms in the Bluegrass State.
Coleman has identified Kalshi and Polymarket as defendants for allegedly violating Kentucky’s sports betting regulations through their prediction market operations. He has also targeted VSW, an online social sweepstakes casino associated with brands like Chumba Casino, Global Poker, and LuckyLand Slots.
The attorney general accuses these platforms of conducting unlicensed gambling operations.
Claims Against Prediction Markets
Recently, prediction markets, with industry frontrunners Kalshi and Polymarket, began facilitating trades based on sports event outcomes.
Critics argue that trading shares linked to events like the World Cup constitutes gambling, while supporters, including the Commodity Futures Trading Commission (CFTC) from the second Trump administration, assert that such markets empower sports enthusiasts to leverage their insights beneficially, akin to Wall Street investors acquiring shares based on anticipated performance.
Coleman is not convinced by the arguments from the proponents of prediction markets.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and violating our laws. These massive corporations and their legal masquerades don’t hold up to scrutiny. As one of our state legislative leaders expressed, ‘If it resembles a duck and sounds like a duck,’” stated Coleman.
According to Kentucky law, any entity wishing to conduct sports wagering activities, including sportsbooks, must obtain a license from the Kentucky Horse Racing and Gaming Commission. Licenses for sports wagering are restricted to authorized horse racing associations.
Earlier this year, Kentucky legislators enacted a law restricting horse racing associations from collaborating with Kalshi or Polymarket, effective from July 15, 2026.
Coleman’s lawsuits are requesting a court injunction to prohibit Kalshi and Polymarket from continuing their sports event contracts, alongside seeking actual and punitive damages for consumers who incurred losses on these platforms.
Both Kalshi and Polymarket argue that their federal regulation exempts them from Kentucky’s legal framework.
“Kalshi operates as a federally regulated exchange. The CFTC is our primary regulator, not individual states,” stated a Kalshi representative.
“This action contradicts the established framework recognized by the CFTC,” a Polymarket representative added.
Sweepstakes Legal Actions
Coleman remains skeptical of online sweepstakes casinos, arguing they aren’t engaging in gambling but are promoting social games.
In addition to providing free-to-play online slots and simulated table games, sweepstakes casinos enable players to purchase digital tokens known as sweeps coins. These tokens can be redeemed for cash after meeting certain play criteria.
VGW, one of the largest operators in the sweepstakes industry, which continues to offer its services in Kentucky, is at the center of Coleman’s crackdown on social gaming.
“This company may employ new technology and strategies to obscure their operations, but the underlying issue remains unchanged. Our office is committed to eradicating illegal gambling in Kentucky, irrespective of its presentation,” added the AG.
VGW is prepared to contest the allegations firmly.
“We firmly reject the allegations put forth by the Kentucky Attorney General and plan to robustly defend against this lawsuit. We have operated in the US lawfully for over a decade, providing millions of Americans with access to free, entertaining social games that this lawsuit aims to restrict,” VGW stated.
Coleman is seeking an injunction similar to that of the prediction market lawsuits, in addition to consumer compensation.