Kalshi Hit with Preliminary Injunction From Washington State Judge

^{Washington Attorney General Nick Brown believes Kalshi has made its money by promoting illegal betting in the state. (Photo: Scott Brauer / ZUMA Press Wire / Alamy)}

A judge in Washington granted the state a preliminary injunction against Kalshi on Monday, agreeing with the state’s arguments that the prediction market was likely violating the state’s gambling laws by offering event contracts there.

Judge John McHale of King County Superior Court granted the motion, saying that the potential harm and likelihood of “actual and substantial injury to Washington consumers from illegal gambling activities” outweighed the potential harm to Kalshi from the injunction.

AG: Kalshi Committed ‘Brazen Violations of Washington Law’

The ruling adds Washington to the list of states that have successfully fought for ruling that would ban or restrict Kalshi’s offerings. Others include Nevada, Massachusetts, New York, and Michigan.

The ruling doesn’t immediately halt Kalshi’s operations in the state, however. The court is set to issue a final order with specific terms for the preliminary injunction on Aug. 5. At that point, Kalshi and the state will almost certainly engage in continued legal wrangling, as has been seen in other states.

But for now, Washington officials are framing the court’s decision as a win for the state.

“This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” Washington Attorney General Nick Brown said in a statement. “Kalshi padded their pockets as they promoted illegal betting on sports, elections, the total number of measles cases this year, what will witnesses say during a child trafficking hearing, and even natural disasters.”

Washington has some of the most restrictive laws against online gambling in the country. In 2006, the state legislature amended the 1973 Gambling Act, specifically outlawing internet gambling, a move that has often landed Washington on a list of prohibited states even for offshore and grey market operators.

Kalshi: Federal Law, CFTC Back Prediction Markets

Kalshi and other prediction markets operate across the country under the approval of the Commodity Futures Trading Commission (CFTC). The CFTC has maintained that it has exclusive jurisdictions over such trading platforms, and that state gaming laws do not apply to the financial instruments on the sites. Kalshi cited this reasoning in its response to the Washington ruling.

“Many courts – including the Third Circuit – have made this clear,” a spokesperson for Kalshi said in a statement. “We’re disappointed to see Washington State continue wasting taxpayer dollars.”

Results have been mixed for state officials and prediction markets in courtrooms across the country. While Kalshi did win a ruling in the Third Circuit Court of Appeals, which held that New Jersey regulators could not enforce the state’s gambling laws against the prediction market, many state courts have reached the opposite conclusion, often arguing that Kalshi’s offerings fit state definitions of gambling.

The deluge of contradictory rulings will likely see the issue appear before the Supreme Court in the near future. Until then, state and federal lawmakers have continued to grapple with the growth of prediction markets. Even Congressional lawmakers have expressed doubts about how prediction markets are currently operating in the United States, while some states have decided to try to tax the platforms rather than outlaw them.