Kentucky sued Kalshi and Polymarket, saying the platforms are running illegal sportsbooks without state gambling licenses.
Kentucky Attorney General Russell Coleman sued Kalshi and Polymarket, alleging that their sports event contracts amount to unlicensed sports betting in the state.
In a Wednesday announcement, June 17, Coleman said his office filed three lawsuits in Franklin Circuit Court. The cases target Kalshi, Polymarket, and VGW, an online casino operator behind Chumba Casino, Global Poker and LuckyLand Slots.
The Kalshi case also names affiliated companies, including Coinbase, according to the attorney general’s announcement.
Read also: US Gaming Groups Demand Ban on Sports Prediction Markets in CLARITY Act
State Says Event Contracts Are Sports Bets
The state claims that Kalshi and Polymarket are allowing their customers to place bets on games and even player performance without following the necessary licensing and tax requirements, which are mandatory when placing legal sports bets.
“Kalshi and Polymarket are operating illegal sportsbooks in Kentucky and breaking our laws,” Coleman said.
He also accused the companies of using legal wording to disguise what Kentucky views as gambling. “These multi-billion dollar corporations and their legal fictions don’t pass the sniff test,” he added.
According to Coleman, Kalshi allows betting in sports event contracts through several categories, with sports wagering comprising around 89% of the contracts’ trading volume in 2025, when there was roughly $23 billion worth of contract volume.
The Polymarket lawsuit alleges that the platform allows customers to gain access to a variety of products resembling those of a traditional sportsbook market such as money lines, spreads, props, and parlays, although referred to as sports event contracts.
Coinbase, VGW Also Named
Kentucky also accused Coinbase of working with Kalshi in a way that helped bring unlicensed sports betting to users through its platform.
The lawsuits come as states and federal regulators fight over who controls prediction markets. Kalshi and other platforms have argued that event contracts fall under federal commodities law. But states claim sports markets still belong under local gambling rules.
Kentucky’s move also comes just weeks before a new state law takes effect on July 15, barring licensed sportsbooks in the state from contracting with Kalshi or Polymarket.
Read more: New US Rules for Prediction Markets: What Happens to Polymarket and Kalshi?
