Kalshi has begun restricting access to sports, election, and other event contracts in Washington state, following a court order finding that the prediction market operator was likely violating state gambling laws.
- Kalshi has begun restricting access to sports, election, entertainment, and other event contracts in Washington following a court order finding likely violations of state gambling laws.
- The restrictions follow a court mandate requiring Kalshi to implement IP and residency-based geofencing, with a multi-source system coming by Sept. 2.
- Washington becomes the third state after Michigan and Nevada to restrict Kalshi, intensifying the legal battle over whether prediction markets are governed by federal or state gambling laws.
The decision handed down last week by King County Superior Court Judge John McHale ordered Kalshi to stop advertising and offering event contracts tied to sports, elections, entertainment, culture, and “mention markets,” among other things.
“This does not include all the wagers offered on Kalshi, but it includes a substantial part of their business, which in recent years has been increasingly driven by sports wagers,” the Washington attorney general’s office said in a press release.
Kalshi was still permitted to offer contracts for trading in connection with commodities, climate, economics, and finance.
Judge McHale also ordered Kalshi to implement IP address and residency-based geofencing by Aug. 19 and then put in place a “multi-source” geofencing system by Sept. 2.
The latter measure, provided by geolocation company GeoComply, is intended to “prevent anyone located within the geographic boundaries of the State of Washington from purchasing any event contract, or other contract, instrument or product in violation of the preliminary injunction.”
If Kalshi fails to implement the required geofencing system by Sept. 2, and doesn't have a good enough reason why, the company could be subject to daily fines of $120,000.
However, the state attorney general’s office said it expected Kalshi to begin restricting access Wednesday, and Kalshi users began reporting notifications about restrictions in the state on social media. Kalshi spokespeople did not respond to questions from Covers.
Another state challenge
The Washington restrictions mean Kalshi now faces state-level limits on its prediction markets in three states: Michigan, Nevada, and Washington.
Those restrictions come as Kalshi, other prediction market operators, and the CFTC argue in court that state gambling laws do not apply to federally regulated event contracts, including those tied to sports.
To many state gambling regulators, the trading of sports event contracts is just sports betting by another name. However, the exchanges and the CFTC see their business as exclusively regulated at the federal level, preempting state-level gambling laws.
That difference of opinion has led to a growing number of lawsuits involving prediction markets, the CFTC, and states.
We’re holding Kalshi accountable for running an illegal gambling operation. A court ruled that Kalshi must cease most of its operations in Washington in the coming weeks. As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for… pic.twitter.com/Tds2xXy1rN
— Attorney General Nick Brown (@AGOWA) August 13, 2026
So far, the legal battle in Washington has favored the state. The only Washington sports betting permitted by the state is in-person on Native American lands under the terms of tribal-state gaming compacts.
The Washington Gambling Commission said in December that sports event contracts were not authorized in the state. Washington State Attorney General Nick Brown then sued Kalshi in March, alleging the prediction market operator was offering illegal gambling.
Judge McHale’s order said the state had “shown a likelihood that Kalshi’s conduct” violates Washington’s gambling laws, which he said were not preempted by the federal Commodity Exchange Act.
Kalshi maintains that it is solely subject to CFTC oversight. The company is seeking review of the preliminary injunction, but Washington’s Court of Appeals declined to stay the order while that review proceeds.
“We respectfully disagree with the court’s decision and are considering all legal options,” a Kalshi spokesperson said last week.
