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A Washington state court has granted a preliminary injunction against prediction market platform Kalshi, temporarily blocking it from offering sports-related event contracts in the state after finding Washington is likely to succeed in its claims that the contracts violate state gambling laws.
King County Superior Court Judge John McHale ruled that the Commodity Exchange Act (CEA) does not preempt Washington’s gambling laws, rejecting Kalshi’s argument that its federally regulated event contracts are beyond the reach of state regulators.
The court found Kalshi likely engages in illegal gambling, bookmaking, and professional gambling under Washington law, and said its advertisements describing its products as “legal betting” in Washington were likely to mislead consumers under the state’s Consumer Protection Act.
“Kalshi offers illegal gambling activities to Washington consumers and solicits bets from Washington consumers on its platform,” McHale wrote in the order.
The judge said the public interest favored granting the injunction, writing that “the public interests at stake and potential harm to consumers in the continued operation of Kalshi’s online gambling activities in the State of Washington outweigh harm to Kalshi.”
The injunction will not take effect before August 5. The court directed the parties to submit proposed terms by August 3 and said it would allow them to confer in the hope that Kalshi “may provide insight into effective ways to protect Washingtonians as the State seeks to do.”
McHale also rejected Kalshi’s central legal argument, writing that “the Commodity Exchange Act (CEA) does not preempt Washington State gambling law” and that “regulation of gambling and regulation of futures markets are different fields of regulation.” He added that Congress “did not intend to supersede or limit States in regulating gambling.”
Responding to the ruling, a Kalshi spokesperson said the company disagreed with the court’s interpretation.
“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 spokesperson said.
The Washington decision marks the latest legal setback for Kalshi as it battles state regulators over whether its sports-event contracts are governed exclusively by federal commodities law or also subject to state gambling laws.
Washington becomes the latest state to obtain an injunction against Kalshi’s sports-event contracts, joining Massachusetts, Nevada and Michigan.
Sports and gaming attorney Daniel Wallach told The Block courts have now issued 23 decisions on requests for preliminary injunctions or temporary restraining orders in prediction market cases, with states prevailing in 19 of them.
“The tide is turning sharply in the states’ favor,” Wallach said.
He added that although the issue would likely be decided by the U.S. Supreme Court, “Kalshi’s map for sports-related contracts could look markedly different in six months than it did earlier this year when it was not the subject of any injunctions barring it from offering sports contracts.”
Separately, the Commodity Futures Trading Commission has sued New York, seeking a declaratory judgment that federal law gives it exclusive authority over event contracts, underscoring the broader legal battle over the regulation of prediction markets.