Arkansas Attorney General sues Kalshi and VGW for illegal gambling

The two lawsuits seek relief that includes restitution, penalties, taxes and injunctive relief

Arkansas Attorney General Tim Griffin has filed separate lawsuits against prediction market platform Kalshi and sweepstakes casino operator VGW for illegal gambling.

The lawsuit against the prediction market provider aims "to stop Kalshi's illegal gambling operations in Arkansas, recover money unlawfully obtained from Arkansas consumers, hold Kalshi accountable for its deceptive and unconscionable practices, impose civil penalties, and obtain all other relief available under Arkansas law."

"Kalshi has built a global business that it calls a prediction market, allowing consumers to wager money on the outcome of just about anything," said AG Griffin. "You can wager on the outcome of elections, reality competition shows, football games, and much more. It doesn't take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling. And gambling on an unregulated platform is squarely prohibited by Arkansas law.

"Arkansas law is concerned with substance, not semantics, and in Arkansas, gambling is regulated to protect consumers. Instead of obtaining the licenses, submitting to the oversight, complying with the restrictions, and paying the taxes required of lawful gambling operators in Arkansas, Kalshi opened its platforms to Arkansas consumers, including individuals as young as 18 years old, encouraged them to wager real money on sporting and entertainment events, and profited from those wagers."

The AG noted that although Kalshi insists that its products are not gambling, "its actions speak louder than its labels."

"Kalshi offers self-exclusion tools, deposit limits, trading breaks, and other tools commonly associated with gambling operators to help users stay in control of wagering activity," said AG Griffin. "It promotes gambling addiction resources, including its own partnership with the National Council for Problem Gambling. Kalshi is not blind that its platform presents real, tangible risks to its users, including excessive wagering, financial losses, depression, and other mental health harms.

"That's why I have brought this lawsuit today to hold Kalshi accountable for multiple violations of the Arkansas Deceptive Trade Practices Act. The relief we are seeking includes restitution, penalties, taxes, and injunctive relief."

A second lawsuit has been filed against VGW, operator of social gaming platforms including Chumba Casino, LuckyLand Casino, LuckyLand Slots, and Global Poker.

"Arkansas's gambling laws are clear," continued AG Griffin. "If you're providing a means for Arkansans to gamble money within our state, you are subject to the rules and regulations that govern legal gambling.

"VGW provides Arkansans the opportunity to play various popular online games, and it claims that it is not operating a gambling business. But our review of the company shows that claim to be false. That's why I've sued the company today for violating the Arkansas Deceptive Trade Practices Act."

AG Griffin continued: "VGW rests its claim that it does not provide gambling services on a distinction between two virtual currencies. One is called 'Gold Coins,' and it is effectively worthless. But consumers purchase Gold Coins with real money. When they do, they receive 'Sweeps Coins' as a bonus. Sweeps Coins can be used to play online casino-style games, and users can redeem Sweeps Coins they win through those games for actual cash. Any reasonable person would call that gambling.

"Decades before VGW launched its platforms, internet sweepstakes cafes promoted a similar arrangement. Consumers paid money for internet time, received 'free' credits, and used those credits to play games for the chance to win cash prizes. When challenged, the cafes argued that consumers were paying for internet time, not the opportunity to gamble. Courts repeatedly rejected the attempt to circumvent gambling laws by calling the activity a sweepstakes.

"VGW's claim that the distinction between the virtual currency one buys and the virtual currency one redeems is weak at best, and courts have rejected this too-cute-by-half logic time and time again. Companies that operate gambling businesses in Arkansas are subject to our gambling laws, plain and simple. Our lawsuit seeks relief that includes restitution, penalties, taxes, and injunctive relief," he added.