Kentucky AG goes after prediction markets and sweepstakes

Kentucky has become the latest state to join the fray against prediction markets and sweepstakes, with Kentucky’s Attorney General, Russell Coleman, filing three separate lawsuits against prediction markets and sweepstakes operators.

The action was announced on Wednesday, June 17, on the AG’s official website, with Coleman’s office alleging that the targeted companies breached the state’s consumer protection and gambling laws. Two of the lawsuits specifically targeted prediction market platforms Kalshi and Polymarket. They alleged that their models of allowing customers to buy and sell event contracts were a way to skirt existing gambling laws in the state of Kentucky. Coleman joins his colleagues around the country to argue that prediction markets essentially offer sports gambling products under different names. In a statement, the AG said: Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws. These multi-billion dollar corporations and their legal fictions don’t pass the sniff test. The AG, however, is not going to limit himself to only prediction markets, as he has similarly pursued a third, separate lawsuit that targets VGW, a prominent provider of the so-called sweepstakes-style platforms where players can join and play without spending real cash, but that the AG claims still offer a way to cash out real-world prizes, thus breaching gambling laws. This company may use new technology and a new scheme to hide, but the reality is the same. Our office has a duty to stop illegal gambling in Kentucky regardless of how it’s packaged, Coleman added in the statement.

VGW operates several highly popular sweepstakes websites, including Global Poker, LuckyLand Slots, and Chumb Casino, which have been attacked across state lines in multiple states pursuing enforcement action against the sector despite appeals from trade groups to pass a new regulatory framework rather than roll out outright bans. Coleman has been an outspoken critic of the idea that the Commidity Futures Trading Commission (CFTC) is the only body that can regulate prediction markets, especially when it comes to what he sees as essentially a way to dodge state laws and offer sports betting under a different name. He has supported fellow attorneys general across the nation as they have launched similar efforts against the sector, attempting to subject prediction markets platforms to gaming laws specifically over their offer of sports event contracts.