Arkansas Sues Kalshi and VGW Over Alleged Illegal Gambling

Arkansas Attorney General Tim Griffin has filed a lawsuit against Kalshi, a prediction market operator offering an alternative to online gambling, and VGW, a sweepstakes casino company. According to the lawsuits, the two companies are operating illegal gambling in the state by presenting their products as something else. The lawsuits were filed on November 4 and will be heard under the Arkansas Deceptive Trade Practices Act.

The lawsuits seek damages, administrative fines, unpaid taxes, and an order halting the companies' operations. Griffin argues that although Kalshi uses derivatives market terminology, the platform is "a plain gambling platform." Specifically, it is alleged that sports and election contracts are in effect gambling. The filing distinguishes Kalshi's contracts from derivative instruments used to hedge economic risk. According to the filing, most of Kalshi's products do not function as risk management tools but instead operate like "a pocket-sized bookie."

Griffin points out that Kalshi offers tools associated with gambling operators, such as self-exclusion, deposit limits, and links to the National Council on Problem Gambling. The filing also states that Kalshi allows people aged 18 to 20 to participate. However, casino customers in Arkansas must be at least 21 years old. According to the filing, Kalshi knows its platform carries real risks for users, including excessive betting, financial losses, and depression.

The lawsuit is based on an opinion the state issued in October 2025 in response to questions from Senator Bryan King. That opinion concluded that a business model similar to Kalshi's counts as gambling under Arkansas law and requires a license. The lawsuit was filed more than a year after the opinion was published.

Around the same time, the Ninth Circuit Court of Appeals denied Kalshi's request to reconsider the Nevada ruling. Flutter lowered its 2026 expectations. A major Wall Street trading firm also entered the prediction market space.