The crackdown on prediction markets in Kentucky is going from legislative to litigious.
Kentucky Attorney General Russell Coleman announced Wednesday that the state has launched multiple lawsuits against prominent prediction market and sweepstakes casino operators.
- Kentucky Attorney General Russell Coleman filed lawsuits against Kalshi, Polymarket, and VGW, alleging they operate illegal gambling platforms in the state.
- The lawsuits argue the companies offer unlicensed sports betting and provide inadequate responsible gambling protections for users.
- The companies maintain that federal oversight by the Commodity Futures Trading Commission protects prediction markets from state-level regulation.
Those lawsuits, Coleman noted, accuse “each of these companies of operating unlicensed and illegal sports betting and gambling platforms in Kentucky.”
The three legal actions were filed in Franklin Circuit Court and are aimed at Kalshi and its affiliates (which includes Coinbase), Polymarket and its affiliates, and sweeps operator VGW.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said in a press release. “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 ...”
While the main thrust of the lawsuits is over what the state sees as the prediction markets and their partners offering unlicensed online sports betting in Kentucky, theay also take issue with alleged shortcomings by the exchanges in offering “few or no resources” for responsible and problem gambling.
Coleman had already taken several steps on the issue, joining with other state attorneys general to argue for state jurisdiction over sports betting and filing briefs in other ongoing lawsuits.
Furthermore, Coleman’s office pointed out that recently passed legislation in Kentucky, which will take effect July 15, forbids licensed sportsbook operators in the state from partnering with prediction market operators like Kalshi and Polymarket.
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.
— Attorney General Russell Coleman (@kyoag) June 17, 2026
More: https://t.co/tFeKWMzeKo pic.twitter.com/4yMGwWUQuj
None of Coleman's claims have been proven or tested in court. Nevertheless, the Kentucky lawsuit now joins the many other legal actions involving prediction markets across the U.S., as state and tribal gaming entities seek to rein in the federally regulated exchanges and their de facto form of sports betting.
For their part, prediction market operators continue to point to their federal regulation, courtesy of the Commodity Futures Trading Commission, as a shield against state-level regulation and taxation.
“This action runs counter to the CFTC's established framework for regulating prediction markets,” a Polymarket spokesperson told Covers in a statement Wednesday. “We look forward to addressing these claims through the appropriate legal process.”
More to come.
