A Washington state court has granted a preliminary injunction against Kalshi, finding that its sports event contracts likely violate state gambling laws. The order will not take effect before August 5.
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King County Superior Court Judge John McHale ruled that gambling regulation and futures regulation cover different legal fields.
“The Commodity Exchange Act (CEA) does not preempt Washington State gambling law,” McHale wrote. He added that Congress “did not intend to supersede or limit States in regulating gambling.”
Kalshi has argued that federal regulation through the Commodity Futures Trading Commission prevents states from applying gambling laws to prediction markets. The Washington ruling rejected that position at the preliminary injunction stage.
The court instead found that Kalshi likely engages in illegal gambling, bookmaking and professional gambling under Washington law.
“Kalshi offers illegal gambling activities to Washington consumers and solicits bets from Washington consumers on its platform,” McHale wrote.
Advertisements describing the platform as “legal betting” in Washington also likely misled consumers under the state Consumer Protection Act, according to the order.
McHale said potential consumer harm outweighed damage to Kalshi. However, the court delayed enforcement while both sides discuss practical terms designed to protect Washington residents.
Kalshi rejected the ruling.
“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,” a Kalshi spokesperson said.