Posted on: June 21, 2026, 12:06h.
Last updated on: June 21, 2026, 12:06h.
- Kentucky Attorney General Russell Coleman has sued Kalshi, Polymarket, and VGW, alleging they are operating illegal gambling
- The lawsuits seek court orders to halt sports event contracts and sweepstakes casino operations in Kentucky
- Kalshi, Polymarket, and VGW deny wrongdoing, arguing their businesses are lawful
Kentucky Attorney General Russell Coleman has filed lawsuits against three companies that the state’s top law enforcer alleges are operating illegal gambling within the Bluegrass State.
Coleman has named prediction markets Kalshi and Polymarket as defendants on claims that the prediction markets’ sports trading violates Kentucky’s sports betting law. Coleman has also filed claims against VSW, an online social sweepstakes casino company whose affiliates include Chumba Casino, Global Poker, and LuckyLand Slots.
Coleman alleges that the two prediction markets and sweepstakes casino network are operating unlicensed gambling platforms.
Prediction Markets Claims
Last year, prediction markets, with Kalshi and Polymarket being the industry leaders, launched trading on events involving sports outcomes.
Critics say the buying and selling of shares related to events like the outcome of the World Cup constitute gambling and sports betting. Proponents, including the Commodity Futures Trading Commission (CFTC) under the second Trump administration, argue that the markets allow sports fans to use their insights to their financial advantage, not unlike a Wall Street investor buying shares of Walmart on the belief that the company’s earnings will beat expectations.
Coleman isn’t buying what the pro-prediction market lobby is selling.
Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws. These multibillion-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,’” said Coleman.
Under Kentucky law, a sportsbook, or any other company seeking to conduct sports wagering activities, must obtain a license from the Kentucky Horse Racing and Gaming Commission. Sports wagering licenses are only available to licensed horse racing associations.
Kentucky lawmakers passed a bill earlier this year preventing such horse racing associations from partnering with Kalshi or Polymarket. The law becomes effective on July 15, 2026.
Coleman’s lawsuits seek a court injunction ordering Kalshi and Polymarket to cease operating sports event contracts. The complaints additionally seek actual and punitive damages for consumers who lost money on the platforms.
Kalshi and Polymarket claim that since they’re federally regulated, they are not subject to Kentucky laws.
Kalshi is a federally regulated exchange. The CFTC is our regulator — not the states,” a Kalshi spokesperson said.
“This action runs counter to the CTFC’s established framework,” added a Polymarket spokesperson.
Sweepstakes Litigation
Coleman is dismissive of online sweepstakes casinos, claiming they aren’t conducting gambling but promotional social games.
In addition to offering free-to-play online slots and simulated table games, sweepstakes casinos allow players to purchase a secondary digital token called sweeps coins. Those sweeps coins, once played a certain number of times, can be redeemed for cash.
VGW, among the largest sweepstakes operators, which continues to allow its brands to be accessed in Kentucky, is the target of Coleman’s social gaming crackdown.
“This company may use new technology and a new scheme to hide, but the reality is the same. Our office has a duty to stop illegal gambling in Kentucky regardless of how it’s packaged,” the AG said.
VGW isn’t backing down.
We respectfully reject the Kentucky Attorney General’s claims and plan to vigorously defend this lawsuit. We have lawfully operated in the US for more than a decade, delivering online Social Plus games to millions of Americans who value the freedom to enjoy the free, fun entertainment that this lawsuit effectively targets,” VGW said.
Coleman is seeking a similar injunction to the prediction markets lawsuits, plus consumer damages.
