Arkansas Sues Kalshi and VGW Over Gambling

Arkansas Attorney General Tim Griffin has sued prediction market Kalshi and sweepstakes casino operator VGW, accusing both of offering illegal gambling to people in Arkansas. The two lawsuits were filed on Wednesday, November 4, in separate county courts, and both are brought under the state’s Deceptive Trade Practices Act.

Under Amendment 100, approved by voters in 2018, sports wagering and casino gaming are restricted exclusively to licensed land-based casino franchisees operating in specified counties and their authorized mobile wagering skins. Operating a commercial wagering platform outside this statutory licensing scheme constitutes an illegal gambling operation and an unconscionable trade practice under Ark. Code Ann. § 4-88-107.

The Kalshi case names KalshiEX LLC and Kalshi Inc. and was filed in Independence County, the Arkansas Advocate reported. The VGW case went to White County and covers Chumba Casino, LuckyLand Casino, LuckyLand Slots and Global Poker. In both, Griffin’s office says it wants restitution, penalties, taxes and injunctive relief. Everything in the complaints is an allegation, and neither company has had its say in court yet.

Kalshi Branded a Pocket-Sized Bookie

Griffin didn’t dress it up. “It doesn’t take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling,” he said in the Kalshi release. “And gambling on an unregulated platform is squarely prohibited by Arkansas law.”

The complaint itself calls Kalshi a “pocket-sized bookie”, according to the Advocate. Griffin says Kalshi skipped the licenses, oversight and taxes that legal operators in Arkansas accept, and opened its platform to consumers as young as 18 instead, encouraging them to wager real money on sporting and entertainment events.

Its Own Safety Tools Become Evidence

The sharpest part of the Kalshi case is how it uses the company’s Responsible Gambling features against it.

The state turned Kalshi’s consumer protection infrastructure against the platform. Prosecutors argued that by deploying self-exclusion registries, deposit throttling, cooling-off periods, and problem gambling warnings, Kalshi demonstrated actual knowledge of the inherent gambling risks associated with its sports-event outcome contracts.

VGW’s Two Coins Under the Microscope

The VGW complaint goes after the dual-currency model that every sweepstakes casino runs on. Players buy Gold Coins with real money, coins Griffin calls “effectively worthless”, and they get Sweeps Coins as a bonus. Those can be played on casino-style games and redeemed for cash. “Any reasonable person would call that gambling,” Griffin said.

He compared it to the internet sweepstakes cafes of years past, where customers paid for internet time and got “free” credits to play for cash prizes. Courts repeatedly rejected that argument, Griffin said, and they have rejected this “too-cute-by-half logic time and time again.” The lawsuit puts it more bluntly, according to the Advocate: “While masquerading as a free sweepstakes, defendants accepted money from Arkansans, provided them the means to gamble, and paid out winnings in cash and other prizes.”

Neither Kalshi nor VGW had responded to the Advocate’s requests for comment on Wednesday.

A Familiar Fight for VGW

The action follows a precedent established by New York Attorney General Letitia James, who secured an $8 million disgorgement settlement and statutory ban against VGW in late 2025, alongside ongoing civil litigation initiated by Kentucky Attorney General Russell Coleman in June 2026 over the legality of sweepstakes casinos.

Judicial Forum Strategy: State Consumer Law versus Federal Preemption

The filing of ADTPA claims in state circuit courts reflects a deliberate procedural strategy to bypass federal court jurisdiction. While Kalshi continues to assert that Section 2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. § 2(a)(1)(A)) grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over exchange-traded derivatives, state attorneys general are framing enforcement actions around state consumer protection statutes and police powers reserved under the Tenth Amendment.

By bringing enforcement actions under state trade practice laws rather than direct gaming statutes, state prosecutors minimize the risk of federal court stays under the Younger abstention doctrine or the Anti-Injunction Act (28 U.S.C. § 2283), complicating Kalshi’s efforts to secure federal injunctive relief.

Kalshi’s State Docket Keeps Growing

For Kalshi, Arkansas joins a long list. Utah filed 14 criminal charges against the company and its two founders in late October, and New York’s attorney general sued Kalshi in July 2026. Kalshi has argued in Utah that because it operates a federally registered exchange, a state can’t treat its sports contracts as gambling.

Washington agrees. The CFTC sued Utah on October 27 to stop it enforcing state gambling law against CFTC-registered exchanges, and its release says the agency has started legal proceedings against nine other states. Arkansas is now asking a county judge to make Kalshi pay state gambling taxes on contracts the CFTC claims as its exclusive jurisdiction.

With Arkansas joining Utah, New York, Ohio, Tennessee, Washington, and Arizona in prosecuting prediction exchanges, and joining New York, Michigan, and Kentucky in pursuing sweepstakes casino operators, the national legal landscape for alternative gaming models continues to fragment into strict state-by-state enforcement actions.