Kalshi has vowed to appeal after a Washington state judge granted a preliminary injunction. The injunction finds that the CFTC-regulated prediction market operator is likely in violation of the state’s gambling and consumer protection laws.
The ruling marks the latest escalation in the legal battle over whether federally regulated prediction markets fall exclusively under federal oversight or remain subject to state gambling laws.
Washington judge grants preliminary injunction against Kalshi
Washington Attorney General Nick Brown announced that King County Superior Court had granted a preliminary injunction, finding that the state was likely to succeed in its case against Kalshi.
According to the Attorney General’s Office, the court found Kalshi likely violated Washington’s Gambling Act and Consumer Protection Act.
They operated an illegal online gambling business within the state. A final injunction order is expected on August 5, following additional briefing on appropriate remedies.
The Attorney General argued Kalshi’s platform allows users to wager on a broad range of events, including sports, elections, public hearings, disease outbreaks, and other future events.
The complaint also cited Kalshi’s advertising that users can “bet on anything”. It alleged the company promoted online sports betting in Washington despite state restrictions.
Washington further claims Kalshi’s business model amounts to illegal gambling under state law. This is because users stake money on future contingent events for potential payouts, while Kalshi earns fees from those transactions.
Kalshi rejects state’s authority over prediction markets
Kalshi said it disagrees with the ruling and intends to appeal.
Responding to the decision, Kalshi spokesperson Jacki McGavick argued that states lack the authority to regulate federally supervised prediction markets.
States don’t have jurisdiction to regulate prediction markets. Many courts — including the Third Circuit — have made this clear. We’re disappointed to see Washington State continue wasting taxpayer dollars.
The company has consistently argued that its event contracts are regulated under the Commodity Exchange Act. Also, it falls under the exclusive jurisdiction of the Commodity Futures Trading Commission [CFTC], rather than individual state gambling regulators.
The Washington court, however, concluded at this preliminary stage that the Commodity Exchange Act does not preempt Washington’s gambling laws, allowing the state’s case to proceed.
The case could shape future oversight of prediction markets
The dispute extends beyond Washington.
Several states have challenged Kalshi’s event contracts, particularly sports-related markets. At the same time, the company has maintained that federal regulation should override conflicting state gambling rules.
The Washington lawsuit reflects that broader debate. The state’s complaint argues that Kalshi’s platform functions like a traditional sportsbook despite its products being described as prediction markets.
At the same time, Kalshi maintains that they are federally regulated financial contracts.
The outcome of the appeal could influence how prediction markets are regulated across the United States, particularly as the sector continues to expand into sports, politics, and other real-world events.
Final Summary
- A Washington judge granted a preliminary injunction after finding Kalshi is likely violating the state’s gambling and consumer protection laws.
- Kalshi plans to appeal, arguing that prediction markets fall under exclusive federal regulation rather than state gambling laws.
