Washington Court Halts Kalshi Betting Operations, Defying CFTC Support
A King County judge ordered the prediction market exchange to cease offering wagers on sports, elections, and politics in Washington state, with enforcement deadlines as early as August 19—a major blow arriving just days after federal regulators intervened to keep Kalshi operating.
State Court Shuts Down Kalshi in Washington
A King County Superior Court judge has mandated that Kalshi cease operating most of its prediction market business within Washington state, finding that the exchange violated the state’s Gambling Act and Consumer Protection Act by running what amounts to an illegal gambling operation, according to the Washington State Attorney General’s office.
The court’s final order prohibits Kalshi from offering, accepting, or facilitating wagers on sports, elections, politics, entertainment, culture, technology, science, and on so-called “mentions” contracts—bets on whether public figures will utter specific words. The exchange has until August 19 to implement IP address and residency-based geofencing to block Washington residents, with a multi-source geofencing system required by September 2. Additionally, the court barred Kalshi from advertising these wagers in the state, ruling that such marketing constitutes unfair and deceptive practices.
Attorney General Nick Brown highlighted that Kalshi had built wealth by enabling wagers on sports, elections, and natural disasters, as well as geopolitical events. The AG’s office cited promotional materials showing Kalshi marketing its platform as a way to circumvent Washington’s gambling restrictions.
A Federal-State Showdown Over Derivatives
The ruling creates a striking contrast with federal action. The Commodity Futures Trading Commission invoked emergency authority just two days prior, ordering Kalshi to continue operating in compliance with the Commodity Exchange Act’s core principles. The CFTC’s position holds that event contracts are interstate derivatives beyond state gaming law’s jurisdiction, while Washington contends that such bets meet the statutory definition of gambling since money is staked on contingent events.
This disagreement reflects a broader regulatory battle: the CFTC has sued nine states to challenge their bans on prediction markets, targeting Illinois, Arizona, Connecticut, Wisconsin, and Minnesota in rapid succession. Meanwhile, President Donald Trump has backed the federal regulator, calling state officials opposed to prediction markets derogatory names.
What’s at Stake
Kalshi’s track record in court has been less favorable than its federal support suggests. A preliminary injunction granted in July found “substantial injury to Washington consumers” likely without regulatory intervention. The company now faces an uphill climb to retain market access in one of the nation’s most tech-forward states, even as federal authorities work to shield it.
Source: Washington State Attorney General’s office, via Decrypt. Not financial advice.