Kentucky Attorney General Russell Coleman has filed three lawsuits against companies accused of offering illegal gambling products in the state.
The lawsuits target prediction market platforms Kalshi and Polymarket, Kalshi affiliates, including Coinbase, and VGW, the company behind sweepstakes casino brands such as Chumba Casino, Global Poker, and LuckyLand Slots.
The lawsuits were filed in Franklin Circuit Court.
Prediction Markets Face Sports Betting Allegations
The lawsuits against Kalshi and Polymarket focus on sports-related prediction markets.
Prediction market companies often describe their products as “event contracts,” not sports bets. But Coleman’s office argues that the platforms allow users to wager on game winners, point spreads, player statistics, and other outcomes that amount to sports gambling.
According to the attorney general’s office, Kalshi and Polymarket are doing business in Kentucky without a gaming license and without following state gambling regulations.
The state also alleges that Polymarket offers many of the same types of bets as a licensed sportsbook, including moneylines, spreads, point totals, parlays, and prop bets.
“Simply calling them ‘sports event contracts’ doesn’t make them legal,” the attorney general’s office said.
Coinbase Named In Kalshi Lawsuit
Coinbase was also named in connection with Kalshi.
According to Coleman’s office, Coinbase partnered with Kalshi to offer unlicensed sports gambling through its platform.
The attorney general alleges that the two companies split fees whenever a bet is placed through Coinbase.
Gambling Harm Also at Issue
The lawsuits also raise concerns about gambling addiction.
Kentucky alleges that Kalshi, Polymarket, and affiliated entities, including Coinbase, Robinhood, and Webull, provide few or no resources to help users identify or seek help for a gambling problem.
For people at risk of gambling addiction, the legal distinction between a bet and an “event contract” may be meaningless.
Kentucky is not an innocent bystander, as the state has legalized predatory forms of gambling. These lawsuits are against forms of gambling that Kentucky has not sanctioned.
VGW Accused of Running Illegal Sweepstakes Casinos
Kentucky’s third lawsuit targets VGW and its sweepstakes casino brands.
VGW operates Chumba Casino, Global Poker, and LuckyLand Slots. These sites use virtual currencies, including free-play coins and sweepstakes-style coins that can be connected to cash prizes.
Coleman’s office argues that the games are designed to look and feel like traditional casino games, including slots and blackjack.
The attorney general’s office also said the complaint cites research alleging that these products exploit 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.”
Kentucky Law Limits Sports Betting Licenses
Kentucky law gives the Kentucky Horse Racing and Gaming Commission authority to regulate and license sports wagering.
Sports betting licenses in the state are available only to Kentucky’s licensed horse racing associations. Coleman’s office also pointed to the Wagering Consumer Protection Act, a new law set to take effect July 15, 2026, which will prohibit licensed sports wagering operations from contracting with Kalshi or Polymarket.
The lawsuits allege violations of Kentucky consumer protection law, the Loss Recovery Act, and state gambling laws.
Broader Fight Over Prediction Markets
The Kentucky lawsuits are part of a growing fight over whether prediction markets should be treated as gambling products.
Supporters of state gambling regulation argue that prediction market companies are trying to create a parallel sports betting system outside state control.
That could reduce states’ gambling tax revenue.