A Washington state court has sided with regulators in their fight against Kalshi, temporarily barring the prediction market platform from offering sports-related contracts to residents.
King County Superior Court Judge John McHale approved the state's request for a preliminary injunction, finding that Kalshi's sports offerings likely amount to illegal gambling under Washington law.
Key Takeaways
- Washington state has temporarily barred Kalshi's sports contracts, finding they constitute illegal gambling under state law.
- Judge McHale rejected federal preemption, ruling Washington retains authority to regulate Kalshi's sports markets.
- States have won 19 of 23 injunction decisions, yet Kalshi reported $33bn in June trading.
In his written ruling, McHale said the harm to Washington consumers from letting Kalshi's online gambling activity outweighed any harm the company would face from a pause. He also rejected Kalshi's central legal argument, stating plainly that the federal Commodity Exchange Act does not override Washington's authority in this area.
The court plans to review further filings from both sides by Aug. 3, and the injunction itself will not take effect until Aug. 5 at the earliest, giving the two parties a window to discuss possible paths forward.
A Kalshi spokesperson pushed back on the decision, telling The Block that individual states lack the power to regulate prediction markets and pointing to rulings from other courts, including the Third Circuit, that support this position.
The Washington case is one piece of a much larger legal fight playing out across the country. Kalshi has already lost similar battles in Michigan and Nevada, and states have won numerous court-ordered injunctions tied to prediction markets.
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New York deals Kalshi another legal setback
Washington's ruling adds to a growing list of states pushing back against Kalshi, and New York dealt the company its own blow earlier this month. A federal judge ruled July 8 that New York can enforce its gambling laws against the platform, rejecting Kalshi's argument that federal oversight should shield it from state authority.
State Assemblymember Carrie Woerner commended the attorney general's office for pursuing the case, saying prediction market companies should not be allowed to operate in New York without following state rules.
The ruling has also drawn attention from advocacy groups. Michelle Hadden, who leads the New York State Council on Problem Gambling, raised concerns about how easily people can access Kalshi's markets, noting that betting around the clock from a phone lowers the barrier for those prone to compulsive gambling.
She also flagged a gap in age requirements as Kalshi allows users as young as 18, while New York's regulated mobile sports betting market requires bettors to be at least 21.
Woerner said Kalshi's path to legally operating in New York now depends on whether the company applies for state approval, something it has not yet announced plans to do. Without that approval, officials say the platform cannot legally continue serving New York customers.
