Arkansas AG sues Kalshi and VGW over illegal gambling claims

Arkansas Attorney General Tim Griffin has launched legal action against two prominent players in the grey areas of online wagering, filing separate lawsuits this week against prediction markets operator Kalshi and sweepstakes casino group VGW, SBC Americas reported.

Both suits accuse the companies of operating illegal gambling businesses in Arkansas and seek financial penalties, including restitution of customer losses and recovery of unpaid state taxes.

"Companies that operate gambling businesses in Arkansas are subject to our gambling laws, plain and simple," Griffin said in a news release announcing the filings. Kalshi did not respond to a request for comment from SBC Americas before publication.

The complaint against Kalshi leans heavily on the argument that the company has stretched the legal definition of derivatives trading well past its intended scope. The filing states that the case does not concern legitimate markets tied to weather, commodities or other economic conditions, but rather Kalshi's effort to convert almost any real-world happening, from football games to elections to awards shows, into a wagering opportunity.

Griffin's office labelled Kalshi a "pocket-size bookie," arguing that the existence of genuine derivatives trading does not give the company licence to repackage ordinary wagering under that framework.

The Arkansas filing also takes aim at Kalshi's partnership with the National Council on Problem Gambling, arguing the arrangement undercuts the company's own position that its contracts are not gambling products. The suit notes that Kalshi offers self-exclusion tools, deposit limits and trading breaks, protections the state says are hallmarks of gambling operators rather than financial exchanges. The lawsuit contends that a company whose products carried no gambling-related risk would have no reason to direct users toward addiction resources or to build in extra safeguards for younger adults.

VGW faces a parallel action built on alleged violations of the Arkansas Deceptive Trade Practices Act. The state's filing disputes the company's claim that it operates legitimate online games rather than a gambling business, arguing that its review of VGW's model shows otherwise.

Central to the case is VGW's dual-currency structure, in which players use one form of virtual currency for play and can redeem a separate currency for prizes. Griffin's office called the distinction between the two "weak at best," asserting that courts elsewhere have rejected similar arguments from sweepstakes operators as a legal workaround.

The action against VGW seeks the same categories of relief sought from Kalshi, restitution and penalties, along with an order barring the company from continuing to operate in Arkansas.

The filings arrive against the backdrop of a sports betting market that Arkansas voters first approved through a 2018 ballot measure limited to in-person wagering at four casinos. As in other states that initially restricted betting to retail locations, revenue lagged behind jurisdictions with online markets; from the 2019 launch through early 2022, monthly revenue topped $1m only four times.

The state expanded into online wagering in March 2022 when BetSaracen launched, with the DraftKings and FanDuel platforms following in March 2026. SBC Americas reported that the market's cumulative handle reached $2.3bn by May 2026, producing revenue above $185m.