Days after being sued by a prediction markets coalition, Kentucky‘s attorney general launched three new lawsuits Wednesday targeting what he calls “illegal sports betting and gambling” offered by Kalshi, Polymarket and VGW.
The actions filed by AG Russell Coleman in Franklin Circuit Court seek permanent injunctions preventing the companies from operating in Kentucky. They also seek significant civil penalties and restitution.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said in a prepared statement. “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 news release draws a line through each of the actions in accusing “each of these companies of operating unlicensed and illegal sports betting and gambling platforms in Kentucky.”
After numerous failed attempts, Kentucky legalized online sports betting in 2023. More recently, state legislators this year overrode a veto by Gov. Andy Beshear to ban prediction market activity by licensed gaming operators, among a number of associated actions further regulating gaming.
The legislation also implemented a 14.25% tax on prediction markets transactions starting in 2027. A coalition of prediction markets operators last week launched a court challenge to that provision in the same circuit court, calling the tax “specifically targeted and discriminatory.”
What operators do Kentucky gambling lawsuits target?
Kentucky’s legal actions name companies beyond the three named above. Coleman is targeting a host of affiliated brands and companies related to the prediction market and sweepstakes operators:
- Coinbase
- Kalshi
- Polymarket
- VGW (including Chumba Casino, Global Poker and LuckyLand Slots)
Specific to the sweepstakes brands, Coleman called out the dual-currency model and its alleged skirting of Kentucky’s Consumer Protection law, the Loss Recovery Act and state gambling laws.
“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.”
State actions against prediction markets adding up
Kentucky’s lawsuits against Kalshi and Polymarket continue to ratchet pressure from U.S. states against the two most prominent prediction markets operators.
Other state governments acting to stop prediction markets include:
- Arizona
- Massachusetts
- Michigan
- Nevada
- New Mexico
- New York
- Washington
In the lawsuit against Polymarket, Kentucky officials contend that sports event contracts defy the intended utility of the instruments.
“These contracts were originally developed by commodity traders as a straightforward way of hedging their investments in raw materials, like timber and grain. By purchasing an event contract for an adverse event, like a flood or fire during the harvest season, commodity traders could offset the losses from that year’s poor yield,” the suit contends.
“Defendants, however, have repurposed the event contract to allow consumers to wager on the outcomes of a wide range of real-world and imminent (or already ongoing) events, such as when the United States and Iran will enter a permanent peace deal or whether the Federal Reserve will change interest rates.”
