A King County judge granted Washington a preliminary injunction against the prediction market, rejecting the federal-preemption defense Kalshi has leaned on nationwide. Kalshi says it will appeal.
- King County Superior Court Judge John McHale granted the state a preliminary injunction against Kalshi on Monday
- The court found Kalshi likely violated Washington’s Gambling Act and Consumer Protection Act by running illegal online gambling
- McHale rejected Kalshi’s argument that federal commodities oversight preempts state gambling law
- A final order is due August 5, and Kalshi has vowed to appeal
- Washington joins Nevada, Michigan and Massachusetts in restricting the platform, even as a federal appeals court has sided with Kalshi elsewhere
SEATTLE – A prediction market that lets people wager on sports, elections and the number of measles cases in a year has been found, at least for now, to be operating illegal gambling in Washington. A King County Superior Court judge granted the state a preliminary injunction against Kalshi on Monday, July 20.
A Seattle Judge Sides With the State
The order came from King County Superior Court Judge John McHale, and it followed a lawsuit brought by state Attorney General Nick Brown, whose office argued that KalshiEX, the company behind Kalshi, runs an illegal online gambling business under state law. The court agreed the state was likely to prevail, finding that Kalshi probably violated both Washington’s Gambling Act and its Consumer Protection Act. Brown called the decision a first step toward holding the company accountable for what he described as brazen violations of state law.
What the Ruling Does, and Does Not Do
The injunction is preliminary, not a final judgment. It signals that the court believes the state is likely to win as the case moves forward, but it does not settle the fight. McHale deferred the specific terms of the order, asking both sides to confer and submit proposed language by early August. He wrote that the state had shown a real and immediate threat to consumers’ legal rights, and that the public interest and the potential harm to Washington residents outweighed any harm to Kalshi. The court also concluded that marketing and advertising the contracts amounted to unfair or deceptive practices under the state’s consumer law.
The Federal Defense the Court Rejected
Kalshi is registered with the U.S. Commodity Futures Trading Commission and treats its products as event contracts, a type of financial derivative rather than a bet. Its central argument, used against regulators across the country, is that the federal Commodity Exchange Act preempts state gambling laws and leaves oversight to the CFTC alone. McHale rejected that position at this stage, writing that the federal statute does not preempt Washington. For readers new to the category, prediction markets sell contracts that pay out based on whether a future event happens, a structure the state contends functions in practice like a sportsbook.
A Warning the State Says Kalshi Ignored
The judge pointed to a December 2025 notice from the Washington State Gambling Commission that told the company offering event-based contracts was not authorized in the state, and he found that Kalshi had willfully ignored it. Over the past year, Kalshi expanded its sports offerings to Washington users to include wagers on how many points would be scored in a game, the margin between two teams, and how many points an individual player would tally. The site has been open to anyone 18 or older.
Why Washington Draws Such a Hard Line
Washington regulates betting more tightly than most states, and Washington’s gambling laws have long been among the strictest in the country. Its constitution barred gambling on state lands when Washington joined the union in 1889, and in 2006 the Legislature amended the state’s Gambling Act to make clear that internet gambling is illegal. Sports wagering is permitted only on tribal lands. That backdrop helps explain why a product marketed elsewhere as a financial exchange ran into a wall here.
What the State Is Asking For
Beyond stopping Kalshi from operating in Washington, the attorney general’s office is seeking restitution for residents who lost money on the platform, along with civil penalties. In laying out the case, Brown ran through the sweep of outcomes people could stake money on through Kalshi, from natural disasters and disease case counts to sports and elections, and said the company profited while promoting illegal betting to Washington consumers.
One Fight in a National Standoff
The Washington decision lands in the middle of a broader legal split. By the count of gaming attorney Daniel Wallach, states have won 19 of 23 requests for injunctions or restraining orders in prediction-market cases so far. Washington now joins Nevada, Michigan and Massachusetts among states that have moved to restrict Kalshi, while a New York judge recently declined the company’s bid to block enforcement there. Yet Kalshi has notched wins of its own, including a federal appeals ruling and a federal court that blocked Arizona’s criminal charges against it. The CFTC, for its part, maintains that it holds exclusive authority over event contracts and has pushed back against states directly.
The Road That Could Reach the Supreme Court
Competing rulings are exactly the kind of split that can invite Supreme Court review. Kalshi has been winning at the federal appellate level while losing in state trial courts, and the CFTC’s insistence on exclusive federal authority adds another layer to the conflict. In April, the Third Circuit affirmed an injunction that stopped New Jersey from enforcing its gambling laws against the company, finding Kalshi had a reasonable chance of proving federal preemption. If the disagreement among courts deepens, the justices could eventually be asked to decide whether a federally registered exchange can sell sports contracts in states that treat them as illegal wagers.
What It Means for Washington Bettors
For now, nothing changes overnight. The injunction is not expected to take effect before August 5, when McHale plans to issue a final order after both sides weigh in. Once it does, Kalshi would likely have to block Washington residents from its sports contracts through geolocation. Until the courts, and possibly the U.S. Supreme Court, sort out whether these contracts are federal derivatives or state-regulated bets, the map will stay uneven, which matters for anyone tracking where legal U.S. gambling sites can and cannot operate.