TLDR
- Arkansas Attorney General Tim Griffin sued Kalshi and VGW on Wednesday over unlicensed gambling claims.
- Griffin says Kalshi’s self-exclusion tools and deposit limits show it operates as a gambling platform.
- The Kalshi suit came one day after more than $330 million was traded on its Senate control market.
- VGW’s Gold Coins and Sweeps Coins system is at the center of the second lawsuit.
- Both suits seek restitution, penalties, taxes and customer refunds.
Arkansas Attorney General Tim Griffin filed lawsuits on Wednesday against prediction market platform Kalshi and online gaming company VGW. He accuses both companies of offering illegal gambling services in Arkansas without a license. His office announced each case in a separate news release.
The Kalshi lawsuit arrived one day after the U.S. midterm elections. According to Kalshi’s website, more than $330 million was traded on a single question: which party would control the U.S. Senate. That figure covers only one market on the platform.
Griffin also claims both firms broke the Arkansas Deceptive Trade Practices Act. He says the companies misled consumers about whether their services are legal in the state.
Both lawsuits seek restitution, penalties and taxes from the companies. They also ask the courts for orders stopping what Griffin calls unlawful practices.
The suits further request orders requiring Kalshi and VGW to give refunds to customers. Each case was filed in a different county court in Arkansas.
Kalshi’s Safety Features Become Evidence
Kalshi describes itself as a prediction market, not a gambling business. Its users can trade on the outcomes of almost anything, including elections. The company’s app can be downloaded on mobile phones.
Griffin’s case leans on tools Kalshi offers its own customers. He pointed to self-exclusion options, deposit limits and other controls that gambling operators use to help users stay in control of their wagering.
According to Griffin, those features show Kalshi is aware that it runs a gambling platform. In his view, the tools say more about the business than the label the company uses.
“Arkansas law is concerned with substance, not semantics, and in Arkansas, gambling is regulated to protect consumers,” Griffin said in a news release on the Kalshi lawsuit.
“Although Kalshi insists its products are not gambling, its actions speak louder than its labels,” he added. The attorney general filed the Kalshi suit in Independence County Circuit Court.
Griffin argues a company cannot avoid state gambling rules by calling itself something else. He made the same type of argument against VGW.
How VGW’s Two Coins Work
VGW describes itself as an “interactive entertainment company.” Its online platform features games such as Chumba Casino, LuckyLand Casino and LuckyLand Slots, according to Griffin’s office.
The company says it is not operating a gambling business. Griffin said his office reviewed the company and found that claim to be false. His lawsuit challenges how the company structures its games.
“VGW rests its claim that it does not provide gambling services on a distinction between two virtual currencies,” Griffin said. The first currency is called Gold Coins.
Griffin described Gold Coins as effectively worthless, but consumers buy them with real money. When they do, they receive Sweeps Coins as a bonus.
Sweeps Coins can be used to play online casino-style games. Users who win can then redeem their Sweeps Coins for actual cash. That ability to cash out is central to Griffin’s argument.
“Any reasonable person would call that gambling,” Griffin said. The lawsuit against VGW was filed in White County Circuit Court.
