On Wednesday, Arkansas Attorney General Tim Griffin launched a significant legal offensive, filing lawsuits against Kalshi and VGW for allegedly operating illegal gambling enterprises in the state. The lawsuits accuse both companies of violating Arkansas gambling laws and are seeking substantial penalties, including restitution for customer losses and state tax payments.
Griffin stated in a news release, "Companies that operate gambling businesses in Arkansas are subject to our gambling laws, plain and simple."
Regarding Kalshi, Griffin described the prediction market operator as a "pocket-sized bookie." He emphasized that the case is not about legitimate markets managing genuine business risks associated with factors like weather and commodities, but rather Kalshi's attempts to redefine the derivative markets. The lawsuit contends that instead of focusing on economic risk management, Kalshi encourages users to wager on the outcomes of various events, from football games to elections.
The complaint asserts, “The existence of legitimate derivatives does not grant Kalshi carte blanche to turn virtually any occurrence into a betting opportunity.“ Griffin argues that Kalshi's offerings primarily function as a betting platform rather than a tool for managing financial risk.
In a novel approach, Griffin referenced Kalshi's controversial partnership with the National Council on Problem Gambling (NCPG) to bolster his argument. He noted, "Although Kalshi insists that its products are not gambling, its actions speak louder than its labels. Kalshi offers self-exclusion tools, deposit limits, and gambling addiction resources, indicating it is aware of the risks associated with its platform."
Additionally, Griffin's lawsuit against VGW follows a similar trajectory, alleging violations of the Arkansas Deceptive Trade Practices Act. The suit contends that VGW misrepresents its online gaming activities as non-gambling enterprises.
"VGW provides Arkansans the opportunity to play various popular online games, and it claims that it is not operating a gambling business. However, our review shows that claim to be false," claimed Griffin.
He criticized VGW's dual-currency model, arguing it lacks legal legitimacy, stating, "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."
Both lawsuits against Kalshi and VGW seek monetary relief through restitution and penalties, alongside prohibiting their operations in Arkansas.
Looking back at Arkansas’ sports betting history, the state first approved sports betting through a 2018 ballot measure, allowing in-person wagering at four casino locations. However, revenue was limited compared to states with online betting. From its inception in 2019 until early 2022, Arkansas sports betting revenue surpassed $1 million in only four instances.
The market transitioned to online wagering in March 2022 with BetSaracen launching, followed by the addition of DraftKings and FanDuel apps in March 2026. By May 2026, Arkansas reported over $185 million in revenue on a total handle of $2.3 billion.
