Kentucky Attorney General Russell Coleman Sues Kalshi, Polymarket, Polymarket Platforms Over Illegal Gambling

Kentucky Attorney General Russell Coleman filed three lawsuits Wednesday against Kalshi and Polymarket and against VGW and its sweepstakes casino platforms Chumba Casino, Global Poker and LuckyLand Slots, accusing the companies of violating Kentucky consumer protection and gambling laws.

“Kentucky targets prediction markets, puts red state in potential clash with Trump team President Donald Trump has taken the stance that states have no business with firms like Kalshi and Polymarket, and now a staunch GOP state is defying that view”

@coindesk

Coleman said in a statement that "Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws," while the lawsuits also target VGW’s virtual coins as casino-chip equivalents.

@coindesk

The litigation centers on prediction markets that let customers buy and sell event contracts tied to real-world outcomes, which Kentucky argues function as unlicensed gambling operations.

CoinDesk reported Kentucky’s attorney general is also challenging the industry’s claim that oversight belongs with the federal Commodity Futures Trading Commission rather than states, setting up a legal clash with the Trump administration’s position.

In the same dispute, Kentucky’s lawsuits also allege the platforms offer little to no resources for Kentuckians suffering from gambling addiction, with Kentucky law requiring 2.5% of sports betting tax revenue to go toward treatment and prevention.

CoinDesk described Kentucky’s move as putting a Republican-leaning state into a potential clash with the Trump team, after Kentucky argued prediction market oversight belongs in the hands of the federal Commodity Futures Trading Commission.

Trump posted on Truth Social that "It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive," framing the federal regulator as the proper authority.

Louisville Public Media

Kentucky’s case, as presented by CoinDesk, also names partners including Coinbase, Robinhood and Webull and says they do not offer resources for people with gambling problems as required under local law.

In response, a Polymarket spokesperson told CoinDesk that "This action runs counter to the CFTC's established framework for regulating prediction markets," and said the company looks forward to addressing the claims.

CoinDesk further reported that the CFTC has sued eight states, most recently New Mexico, and that court actions have become frequent as the industry defends its legal position.

Beyond the prediction market suits, Kentucky’s legal fight also answers a lawsuit filed last week by a coalition of prediction market companies challenging Kentucky’s latest 14.25% tax on their transaction fees, which they alleged is discriminatory, unconstitutional and preempted by federal law.

“Kentucky's attorney general hassued leading prediction market firmsKalshi and Polymarket, accusing them of offering illegal sports betting without a license, adding its name to the growing list of states opposing the rise of the industry”

CoinDesk

The Washington Times reported that Kentucky’s General Assembly passed the first-in-the-nation 14.25% excise tax on prediction market fees earlier this year, and that Kalshi, Crypto.com and Polymarket US responded by forming the Coalition for Fair Markets and suing to block it.

In the sweepstakes casino case, the Washington Times said Coleman warned the platforms are designed to hook young users, citing his claim that more than half of 17-year-olds are gambling online without safeguards.

The Washington Times also said all three suits are brought under Kentucky’s Consumer Protection Act, the state’s gambling statutes and its 19th-century Loss Recovery Act, which allows triple damages, meaning consumers could recover three times their losses.

CoinDesk added that a federal judge denied Polymarket U.S. in its motion trying to block Michigan from suing the platform, and that most observers expect the matter to rise to the U.S. Supreme Court for eventual resolution.