Kentucky Attorney General Russell Coleman has filed lawsuits against three companies, accusing them of operating illegal gambling activities within the state. The legal actions target prediction markets Kalshi and Polymarket, as well as online sweepstakes casino operator VGW.
Coleman claims that Kalshi and Polymarket are conducting unauthorized sports betting through their sports event contracts, violating Kentucky’s sports wagering laws. He also alleges that VGW and its affiliated brands are running unlicensed gambling platforms disguised as promotional social games.
Claims Against Prediction Markets
Last year, Kalshi and Polymarket introduced trading on events involving sports outcomes. Critics argue that buying and selling shares on outcomes such as the World Cup results amounts to gambling and sports betting. Supporters, including the Commodity Futures Trading Commission (CFTC), contend that these markets are more akin to financial investments, allowing users to leverage their knowledge similarly to trading stocks.
However, Coleman disputes this position, asserting that Kalshi and Polymarket operate illegal sportsbooks in Kentucky. He emphasized that under state law, any company conducting sports wagering must be licensed by the Kentucky Horse Racing and Gaming Commission, and licenses are restricted to licensed horse racing associations.
Recently passed legislation prevents horse racing associations from partnering with Kalshi or Polymarket, effective July 15, 2026. Coleman’s lawsuits seek court injunctions to halt the operation of these sports event contracts and pursue damages for consumers who lost money using the platforms.
In response, Kalshi and Polymarket maintain that they are federally regulated by the CFTC and therefore not subject to state law enforcement.
Lawsuit Against Sweepstakes Operator VGW
Coleman also targets VGW, one of the largest sweepstakes casino operators, accusing it of running illegal gambling disguised as free-to-play social games. These sweepstakes platforms offer players the ability to purchase “sweeps coins,” which can be redeemed for cash after being used a certain number of times.
The Attorney General insists that despite new technologies and marketing approaches, VGW’s operations still constitute illegal gambling and must be stopped. Coleman seeks an injunction against VGW and consumer damages similar to those sought in the prediction market cases.
VGW rejects the claims and intends to vigorously defend itself, stating that it has lawfully operated in the United States for over a decade, providing lawful social gaming entertainment to millions of Americans.
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