A judge in King County Superior Court has ruled that Kalshi, a prediction‑market operator, likely violates Washington’s gambling and consumer protection statutes.
Judge John McHale granted the state a preliminary injunction, stating that consumers face real and substantial harm if the company continues offering event‑based contracts to Washington residents while the lawsuit proceeds. The final terms of the injunction will be issued on August 5 after additional briefing.
Kalshi’s platform allows users to buy “yes” or “no” positions on future events, ranging from sports and elections to natural disasters. Customers receive payouts when correct and lose their stake when wrong, with the company collecting a fee on each wager. The judge identified these contracts as gambling because they risk money, rely partly on chance, and promise a payout to winners.
The court rejected Kalshi’s claim that federal regulation shields it from state gambling laws. The Commodity Exchange Act was held not to preempt Washington’s statutes, and compliance with state law would not conflict with applicable federal law.
Consumer‑protection claims were also deemed likely to succeed. Kalshi’s advertising, which suggested that betting on the NFL was legal in Washington, was found to mislead consumers about the activity’s legality. The court described such marketing as deceptive under the Washington Consumer Protection Act.
After a warning in December that event‑based contracts are not authorized in the state, Kalshi continued targeting Washington customers. The commission had clarified that only tribal casinos may offer sports wagering and that prediction markets remain prohibited.
The dispute has involved a jurisdictional battle. Washington filed the lawsuit in state court, while Kalshi moved the case to federal court, citing its status as a federally regulated derivatives exchange overseen by the Commodity Futures Trading Commission. Washington maintains that the platform operates as illegal gambling under state law.
The order also requires Kalshi to preserve records related to Washington customers. Both parties must submit proposed injunction language before the judge issues the final order.
