Kentucky’s top law enforcement officer is going after online gambling again, this time under the guise of “prediction markets” and sweepstakes games. Attorney General Russell Coleman on Wednesday sued three corporations, claiming they sold gambling items to Kentuckians without state licenses, taxes, and consumer protections.
Coleman Says Firms Run ‘Illegal’ Betting Platforms
Coleman’s office filed the suits in the Franklin Circuit Court against three companies. The cases target prediction market platforms Kalshi and Polymarket. They also target VGW, which operates sweepstakes casinos such as Chumba Casino, Global Poker, and LuckyLand Slots.
He says they “operate unlicensed and illegal sports betting and gambling platforms in Kentucky.” Coleman argues the products still amount to betting, even when the firms call them trading or sweepstakes.
Court filings say Kalshi and Polymarket allow users to buy and sell event contracts that pay out based on real‑world outcomes, including elections, economic data, and sports results.
Coleman says about 70% of Kalshi’s recent trading volume involved sports, making it “for all practical purposes an unlicensed sportsbook” under state law, and he adds that the platforms offer “few or no resources” for responsible gambling, unlike licensed operators that must provide tools and support.
Sweepstake Casinos and Virtual Coin Models
The third lawsuit targets VGW’s sweepstakes casinos, which use virtual coins that players buy and redeem for cash prizes. The complaint says VGW designed the games “to look and feel like traditional slot machines and card tables,” even though the company lacks a Kentucky gambling license. Coleman argues the coin system works like casino chips, so the sites operate as unlicensed online casinos for state residents.
All three lawsuits claim violations of Kentucky’s Consumer Protection Act, gambling laws, and a 19th‑century Loss Recovery Act that lets people seek triple damages on illegal gambling losses. The state wants civil penalties of up to $2,000 per violation and $10,000 when older adults are harmed, plus court orders blocking these platforms from accepting bets unless they comply with state rules.
Kalshi and Polymarket say the Commodity Futures Trading Commission regulates their prediction markets and that this federal oversight should take precedence over certain state laws. Meanwhile, Coleman argues that prediction markets’ sports contracts are no different from sports betting.
He says Kentucky “has the jurisdiction and the responsibility to set the rules of the road.” Coleman also says he will defend the new 14.25% state tax on prediction market transaction fees, which the industry is challenging as discriminatory.
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