Kentucky Attorney General Russell Coleman has filed lawsuits against prediction market operators Kalshi and Polymarket, as well as sweepstakes casino group VGW, accusing the companies of running illegal gambling activities within the state.
The cases were submitted to Franklin Circuit Court on 17 June and allege violations of Kentucky consumer protection laws, the state’s Loss Recovery Act and recently adopted regulations governing prediction markets. According to Coleman, the action is aimed at preventing what his office describes as unlawful gambling operations disguised under alternative business models.
State officials claim that Kalshi and Polymarket offer sports-related contracts that effectively function as sports betting products without holding Kentucky gaming licences. The lawsuits argue that users can wager on outcomes such as game winners, point spreads and player performance statistics while bypassing the regulatory requirements imposed on licensed sportsbooks.
The complaint against VGW focuses on its sweepstakes casino operations, including brands such as Chumba Casino, Global Poker and LuckyLand Slots. Kentucky alleges these products also constitute illegal gambling under state law.
Coleman said his office has a responsibility to combat illegal gambling regardless of how operators market their products. The lawsuits seek court declarations that the companies violated Kentucky law and request financial penalties that could reach up to $2,000 per violation of the Kentucky Consumer Protection Act, with additional fines of up to $10,000 for violations affecting individuals aged 60 or older.
The legal action adds to a growing national conflict between state regulators and prediction market platforms. Several states have challenged Kalshi and Polymarket in recent months, arguing that their event contracts closely resemble traditional sports betting products. The companies, meanwhile, maintain that their markets fall under federal oversight rather than state gambling regulations.
Kentucky has also recently introduced a new tax framework for prediction markets, further intensifying the debate over how such platforms should be regulated in the United States.