The racing star is president of the temporary hotel company called Snoozebox, which is offering accommodation for July and August on a derelict site in the east end of Glasgow.
Snoozebox is charging Glasgow 2014 fans up to £250 a night to sleep in accommodation created from former shipping containers.
Games chiefs say they will take action over the hotel’s description on the bookings.com website as the “Glasgow Commonwealth Games Hotel”.
They claim Snoozebox’s own website is seeking to create an association with the Games, forbidden under a parliamentary order passed at Holyrood.
Only sponsors who have struck expensive partnership deals are entitled to use the Games name and symbols.
Organisers have already warned businesses that using terms such as “Games” or “2014” in marketing would be a breach of regulations laid down by the Scottish Parliament.
Snoozebox says its pop-up hotel in Dalmarnock is just “minutes away” from the opening ceremony and the Sir Chris Hoy Velodrome.
The firm’s website states: “Snoozebox Hotel is offering guests the chance to be at the heart of the action, with a site on Dunn Street. Don’t miss a minute of the Games, book your Snoozebox now.”
The hotel is planned for an empty site close to Dalmarnock train station, which will be used by thousands of spectators.
But the scheme has fallen foul of strict “ambush marketing” laws, aimed at cracking down on anyone profiteering from the sporting extravaganza, which begins on 23 July, with the opening ceremony at Celtic Park.
Coulthard, of Twynholm in Kirkcudbrightshire, is president of Snoozebox, which now faces a demand from Glasgow 2014 bosses to remove any association with the Games.
A Glasgow 2014 spokesman said: “Brand protection regulations are normal practice for major events and form part of our commitment to the Commonwealth Games Federation that we would protect and enhance the integrity and reputation of the Games brand.”
Snoozebox has provided pop-up hotels in Edinburgh during the Festival period and Glastonbury. A spokesman for Snoozebox said it would be contacting the hotels website bookings.com to remove the “Glasgow Commonwealth Games Hotel” description.
However, he said he felt the firm itself was not in breach of the special regulations.
He said: “If they believe we are doing something wrong, we will look to changing it. But we are not aware we have breached any trademarks or regulations.
“We just want to let people know where Dunn Street is. I was unaware that would be an issue – it is simply providing information.”
The temporary Snoozeboxhotel consists of linked shipping containers which provide a small living area, bed, shower and toilet.