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Kentucky, CFTC Battle Over Prediction Markets

Kentucky is the latest state to act against prediction markets and sweepstakes casinos. Russell Coleman, the Attorney General of the Bluegrass State, sued Kalshi, Polymarket, and VGW. In response to Coleman’s lawsuit, the Commodity Futures Trading Commission (CFTC) has filed its own lawsuit against Kentucky.

Kentucky Attorney General Sues Prediction Markets and Sweepstakes Casinos

Online casinos and sportsbooks are more accessible than ever, but not everyone is happy about the new types of betting that are available. In June, Kentucky became the latest state to act against sweepstakes casinos and prediction markets.

Kentucky Attorney General Russell Coleman filed three lawsuits to stop what he claims are illegal gambling and sports betting platforms in the Bluegrass State. Coleman also alleges all three companies violate Kentucky’s Consumer Protection law and the Loss Recovery Act.

The operators and companies targeted in Coleman’s lawsuits are:

• Kalshi: A prediction market
• Polymarket: A prediction market
• VGW: Sweepstakes casino platform with brands that include Chumba Casino, LuckyLand Slots, and Global Poker.

According to Coleman, Kalshi and Polymarket violate Kentucky’s sports gambling laws. Crypto trading site Coinbase is also named in the Kalshi lawsuit after partnering with Kalshi to run its own prediction markets.

VGW, on the other hand, is accused of skirting Kentucky’s casino laws. If Coleman’s lawsuit is successful, Kentucky would join the likes of Maine and New York in banning sweepstakes casinos.

CFTC Sues Kentucky Over Prediction Markets

In response to Kentucky’s lawsuits against Kalshi and Polymarket, the CFTC announced its own lawsuits targeting the Bluegrass State. According to the CFTC, Kentucky’s lawsuits violate the CFTC’s jurisdiction to govern prediction markets.

Kentucky is the ninth state sued by the CFTC for attempting to regulate prediction markets. It is also the first state with a Republican AG to be sued by the CFTC.

The other states in legal battles with the CFTC are:

• Arizona
• Connecticut
• Illinois
• Wisconsin
• Rhode Island
• Minnesota
• New Mexico
• New York

While the lawsuits are going on, Kentuckians can continue to access Kalshi and Polymarket.

What Other States Are Banning Sweepstakes Casinos?

Kentucky also joined over a dozen states in combating sweepstakes casinos. Unlike prediction markets, though, the CFTC is not coming to the rescue of VGW’s operations in Kentucky.

Actions against sweepstakes casinos began in 2025, with states like Connecticut and New York banning dual-currency gambling sites. The push against sweepstakes casinos has continued in 2026.

Multiple states, such as California, Louisiana, and Tennessee, have already passed new laws banning sweepstakes casinos in 2026.