Share 
State of Play’s TL;DR
- Kentucky is pushing back hard on prediction markets and sweepstakes casinos, filing three lawsuits against Kalshi, Polymarket, and VGW, arguing they are offering illegal gambling products without state oversight.
- It is another sign that the state-vs.-federal fight over these platforms is expanding.
Kentucky Attorney General Russell Coleman’s office filed three lawsuits in circuit court this week, targeting Kalshi and Polymarket on the prediction market side and VGW’s Chumba Casino, Global Poker and LuckyLand Slots on the sweepstakes side.
The state says the companies are serving Kentuckians while avoiding licensing, taxes, and consumer protections required under state law.
Coleman framed the cases as a simple substance-over-labels dispute.
“You can call bourbon an adult beverage distilled from corn, but it’s still bourbon. You can change the nomenclature, but at the end of the day, if you look at the nature of what these are – this is gambling.”
AG says suits are response to prediction market lawsuit against state
The lawsuits rely on Kentucky’s Consumer Protection Act, gambling statutes and the state’s 19th-century Loss Recovery Act, which can allow triple damages for consumers.
Kentucky also says roughly 70% of Kalshi’s trading volume in a three-month snapshot involved sports wagering.
The legal push comes as Kentucky is already defending a new 14.25% excise tax on prediction market fees. Kalshi, Crypto.com and Polymarket US, through the Coalition for Fair Markets, sued to block that tax. Coleman said Kentucky’s new lawsuits are “simply a response.”
Kentucky at odds with Trump
For Kentucky players, the state’s message is straightforward: If a platform looks like gambling, Kentucky wants it regulated like gambling. Coleman said: “We want them to be regulated” and “We want the ability to protect our people.”
That matters because this is not just a Kentucky-only dispute. The broader fight is over who gets the final say on prediction markets that mirror sports betting: state gambling regulators or federal commodities regulators.
Kentucky has already joined amicus briefs defending Ohio and Tennessee gaming laws against challenges from Kalshi, and 41 state attorneys general urged CFTC Chairman Michael S. Selig to affirm state authority over gambling within state borders.
For operators, the risk is growing on multiple fronts at once: lawsuits, tax fights and the possibility that more states could treat prediction markets and sweepstakes casinos as unlicensed gambling products.
The political wrinkle makes it even more notable. President Donald Trump has backed the prediction market position, putting Kentucky at odds with the administration on this issue, even as Coleman called it “just an outlier” in an otherwise cooperative relationship. It should be noted that Trump’s son, Donald Trump Jr., is heavily invested in Polymarket through his investment company.
Based on reporting by Seth McLaughlin for The Washington Times.
