Kentucky attorney general sues Kalshi, Polymarket and VGW over illegal gambling claims

(ABC 36 NEWS NOW) – Kentucky Attorney General Russell Coleman filed three lawsuits against prediction market platforms, a sweepstakes gambling platform and a cryptocurrency platform, accusing each of operating unlicensed and illegal sports betting and gambling platforms in the state.

According to a news release from Coleman, the lawsuits were filed in Franklin Circuit Court against:

• Kalshi, a prediction market platform, and its affiliates including coinbase;
• Polymarket, a prediction market platform, and its affiliates;
• VGW, an online casino platform with brands including Chumba Casino, Global Poker and LuckyLand Slots.

Prediction market lawsuits

Coleman said that Kalshi and Polymarket allow users to place wagers on game winners, point spreads and player statistics, bypassing consumer protections and tax requirements mandated by Kentucky’s gambling laws. According to the lawsuits, both companies are doing business without a Kentucky gaming license or following state regulations.

Although Kalshi offers “event contracts” on several topics, Coleman noted, sports betting made up approximately 70% of its trading volume during a selected sample period in 2025. Last year, the platform saw nearly $23 billion in contract volume, with 89% coming from sports wagering, according to Coleman.

“Polymarket’s advertisements on social media and elsewhere give the false and misleading impression that it is authorized to offer sports wagering under Kentucky law,” the release read. The platform offers many of the same traditional sports bets that a licensed sportsbook would, including money lines, spreads, point totals, parlays and prop bets.

Coinbase, a cryptocurrency trading platform, has reportedly partnered with Kalshi to operate unlicensed sports gambling on its platform, Coleman detailed. The two companies split the fee whenever a bet is made on Coinbase.

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

The prediction market lawsuits also allege that Kalshi, Polymarket and their affiliated entities — Coinbase, Robinhood and Webull — offer users few or no resources to identify or seek help for a gambling problem, which is required under Kentucky law.

Under state law, the Kentucky Horse Racing and Gaming Commission has the authority to regulate and license sports wagering and has been doing so since 1906. Sports wagering operating licenses are only available to Kentucky’s licensed horse racing associations.

Under the provisions of The Wagering Consumer Protection Act, which became law earlier this year and takes effect July 15, licensed sports wagering operations are prohibited from contracting with Kalshi or Polymarket, according to Coleman.

Sweepstakes lawsuit

VGW and its affiliates operate sweepstakes casino websites that use two different types of virtual gambling chips. The sweepstakes casino games are designed to look and feel like traditional casino games, with slot machines and blackjack games. According to a study cited in the complaint, they also exploit the same psychological triggers related to addiction.

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

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