Arkansas Sues Kalshi, VGW Holdings Over Alleged Illegal Gambling

Last week, Arkansas Attorney General Tim Griffin filed a lawsuit against both Kalshi, a prediction market platform, and VGW Holdings, the company behind prominent sweepstakes brands like Chumba Casino. The lawsuit comes as the state believes this is considered illegal gambling and that they are violating the Arkansas Deceptive Trade Practices Act. 

“Arkansas’s gambling laws are clear,” Griffin said. “If you’re providing a means for Arkansans to gamble money within our state, you are subject to the rules and regulations that govern legal gambling.”

Arkansas Targets Prediction Markets and Sweepstakes Casinos

However, prediction markets maintain they are different from traditional sportsbooks in that they are peer-to-peer trading with no "house." If you're on a prediction market platform, you can sell and buy positions at any time. As for sweepstakes casinos and sportsbooks, they use a dual-currency system with Gold Coins and Sweeps Coins (or whatever the site calls them). Gold Coins are a "for fun" currency, whereas Sweeps Coins can be redeemed for cash prizes and purchased. Because of that dual currency model, states like California, New York, and New Jersey have passed laws banning sweepstakes platforms. 

The argument in favor of sweepstakes casinos is that you don't have to purchase to play.

“Arkansas law is concerned with substance, not semantics, and in Arkansas, gambling is regulated to protect consumers,” he said. “Although Kalshi insists its products are not gambling, its actions speak louder than its labels.”

Both suits filed by Griffin are seeking taxes, restitution, penalties, and refunds for all customers. The state is also pushing the courts to stop Kalshi and VGW from operating in the state altogether. 

Arkansas Cites Kalshi's Responsible Gaming Tools in Lawsuit

In the suit, Griffin also pointed out that Kalshi uses tools like trading breaks, deposit limits, self-exclusion, and other "Responsible Gaming" tools commonly associated with sportsbooks. Kalshi is also partnered with the National Council for Problem Gambling. 

Kalshi has faced significant scrutiny, including a New Jersey petition to the Supreme Court to rule on prediction market platforms. 

“Although Kalshi insists that its products are not gambling, its actions speak louder than its labels,” Griffin said. “Kalshi is not blind that its platform presents real, tangible risks to its users, including excessive wagering, financial losses, depression, and other mental health harms.”