Washington Judge Rules Kalshi Likely Violated State’s Gambling Laws in Preliminary Injunction Win for AG Nick Brown

A King County Superior Court judge has ruled that Kalshi likely violated Washington’s gambling laws, granting the state a preliminary injunction against the prediction market operator and dealing the company one of its more significant legal setbacks to date. The ruling, issued Monday by Judge John McHale, hands an early win to Washington Attorney General Nick Brown in his office’s lawsuit against KalshiEX LLC.

McHale found that the state is likely to succeed in proving Kalshi operates an illegal gambling business in Washington, and that consumers could face substantial harm if the company’s activities continued unchecked while the case plays out. A final injunction order spelling out the scope and specific terms is expected by August 5, following additional discussions between Brown’s office and Kalshi.

How We Got Here

Brown’s office filed suit against Kalshi in March, arguing the platform violates the state’s Gambling Act and Consumer Protection Act by allowing residents to trade on outcomes ranging from sports results to elections to natural disasters. Washington law restricts sports wagering to in-person betting at tribal casinos, and Brown has been blunt about his view of Kalshi’s model. “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,” he said following the ruling.

In his written decision, McHale pointed to Kalshi’s own marketing as evidence of the problem, citing an advertisement depicting a text exchange between two people in which one says, “I found a way to bet on the NFL even though we live in Washington.” The judge also noted that Kalshi had “willfully ignored” a notice from the Washington State Gambling Commission stating that its event-based contracts were not authorized in the state.

The Federal Preemption Fight

Kalshi’s defense throughout this and similar cases nationwide rests on a claim of federal preemption: because the company is registered with the Commodity Futures Trading Commission as a designated contract market, it argues its sports-related event contracts are “swaps” governed exclusively by the Commodity Exchange Act, putting them beyond the reach of state gambling law. McHale rejected that argument in Washington, at least at this preliminary stage, finding the state had shown “a well-grounded fear of immediate invasion of consumers’ legal rights” sufficient to justify halting Kalshi’s operations in the meantime.

That outcome puts Washington in company with Massachusetts and Maryland, where courts have similarly declined to let federal registration shield Kalshi from state gambling enforcement. It stands in contrast to rulings in Nevada, New Jersey, and Tennessee, where federal courts have sided with Kalshi on preemption grounds — a split that has already produced conflicting appellate signals, including a Third Circuit panel that found in Kalshi’s favor in the New Jersey case. A Kalshi spokesperson responded to the Washington ruling by reiterating the company’s core position: “States don’t have jurisdiction to regulate prediction markets.”

What Comes Next

With the scope of the injunction still being worked out ahead of the August 5 deadline, it remains unclear exactly when or how broadly Kalshi will be required to stop operating in Washington, or for how long. Brown’s office has also signaled it intends to pursue damages on behalf of Washington consumers who lost money through the platform, a claim that will be litigated as the underlying case continues.

The Washington decision adds another data point to a rapidly fragmenting legal landscape for prediction markets, one that bettors weighing sportsbook promo codes and other regulated betting options are watching closely as the question of who gets to police these platforms — state gambling regulators or federal derivatives regulators — heads toward likely resolution in the federal courts of appeals.