Kentucky Files Lawsuits Against Kalshi, Polymarket, and VGW

According to a press release from Kentucky.gov, state Attorney General Russell Coleman announced that the state has filed three lawsuits against prediction market platforms, a "sweepstakes gambling platform," and a cryptocurrency platform.

Per the release, Coleman has accused these entities of "operating unlicensed and illegal sports betting and gambling platforms in Kentucky."

Here are the entities against which the lawsuits were filed: 

• Kalshi (prediction market platform) and affiliates such as Coinbase. 
• Polymarket (prediction market platform) and affiliates. 
• Virtual Gaming Worlds is a sweepstakes casino brand that operates platforms like Chumba Casino, Global Poker, and LuckyLand Slots. 

This follows suit with other states that have gone after prediction market platforms, such as New Mexico. 

The Prediction Market Lawsuits

The press release goes on to explain what Polymarket and Kalshi are, saying that they "allow users to place wagers on game winners, point spreads and player statistics, bypassing the consumer protections and tax requirements mandated by the Commonwealth’s gambling laws."

The lawsuits accuse them of doing business in Kentucky without a license, and they also do not follow state regulations. 

The press release notes that sports make up about 70% of its trading volume and says that "[s]imply calling them “sports event contracts” doesn’t make them legal."

They're also targeting Coinbase because they're partnered with Kalshi, and 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,” said Attorney General Coleman. “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…”

Sports wagering licenses are only available to Kentucky's licensed horse racing associations. 

The Sweepstakes Lawsuits

The press release continues by discussing VGW, stating that sweepstakes casino websites use "two different types of virtual gambling chips." This refers to the dual-currency model they use, which includes Gold Coins (for fun only) and Sweeps Coins (which can be redeemed for cash prizes). 

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