Washington Attorney General Latest to File Lawsuit Against Kalshi

^{Washington General Nick Brown speaks outside the US District Court in Seattle. He is leading Washington's charge against Kalshi for being an illegal betting exchange. (Photo: Scott Brauer /  ZUMA Press Wire via Alamy)}

Washington Attorney General Nick Brown filed a civil lawsuit against prediction market platform Kalshi on Friday, accusing the company of operating what amounts to an illegal gambling operation in the state.

The suit, which was filed in King County Superior Court, aims to shut down Kalshi in the state, recover losses for residents, and impose additional financial penalties on the company.

Brown: Kalshi Offers ‘Bleak Future’ for America

Washington has been known for having some of the strictest laws against online gambling in the country, with all online gaming being prohibited. In a statement, Brown not only blasted Kalshi for allegedly flaunting these laws, but also took aim at the company’s goal of allowing people to place financial predictions on virtually anything.

“Kalshi wants people betting on almost everything possible in life – the outcome of elections, Supreme Court cases, even wars,” Brown said in a statement. “For Kalshi, every event, every tragedy is nothing more than a potential way for Americans to risk their fortunes and for Kalshi to get rich. 

Kalshi and other prediction market platforms claim that they are legal exchanges that offer swaps which are regulated by the Commodity Futures Trading Commission. Because the CFTC provides oversight under federal law, they argue, they are different from sports betting and other gambling operations and are not subject to state-level gambling laws.

But lawyers for Washington argue that even Kalshi has used gambling terminology in its own advertising, claiming that users can “bet on everything.” They even pointed to at least one ad that targeted local users by saying that people had “found a way to bet on the NFL even though we live in Washington.”

States Lining Up to Sue Prediction Markets

Kalshi is facing a wave of lawsuits across the country, with various state officials filing civil and criminal charges against the company. There’s even federal legislation under consideration that would ban prediction sites from offering sports-related contracts.

In this case, they released a statement saying that they had a planned meeting with the attorney general to discuss issues, only to be surprised when the lawsuit dropped.

Kalshi's Head of Communications Elisabeth Diana argues that Kalshi is "very different from what state-regulated sportsbooks and casinos offer their customers."

“If AG Brown hadn’t sued us ahead of our scheduled meeting with him, he would have known better than to say we offer war markets,” Kalshi Head of Communications Elisabeth Diana said in a statement. “As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and is subject to exclusive federal jurisdiction.”

But Brown says that in Washington, Kalshi is violating both the Gambling Act and the Consumer Protection Act. He also noted that under the state’s definition of gambling, Kalshi’s activities appear to fall in that category.

“Each Kalshi bet risks money, relies in part on chance, and promises a payout to winners,” Washington’s Office of the Attorney General said in a statement. “Whatever Kalshi chooses to call it, Kalshi’s operations clearly fall under the definition of illegal gambling in Washington.”