Washington Judge Rules Kalshi Likely Violated State’s Gambling Laws

A King County Superior Court judge has ruled that Kalshi, the fast-growing online prediction market, likely violated Washington’s gambling laws and consumer protection statutes, handing the state’s Attorney General a significant early win in one of the most closely watched legal fights in the sports betting industry. The ruling, issued Monday, grants a preliminary injunction against KalshiEX LLC and finds that Washington is likely to succeed in proving the company has been running an illegal gambling operation in the state.

The court also determined that Washington consumers could suffer real harm if Kalshi kept operating while the underlying case plays out, which was enough to justify blocking the company’s activity in the state for now. A final injunction order is expected August 5, after the Attorney General’s Office and Kalshi work through the scope of the ruling and any potential remedies.

How We Got Here

Washington Attorney General Nick Brown sued Kalshi in March, arguing the company’s “prediction market” branding was little more than a rebrand of traditional sports betting — the kind that Washington sports betting law still keeps offline outside of tribal casino properties. Brown’s office pointed to Kalshi’s own advertising, which touted the ability to bet on NFL games in a state where that’s not supposed to be possible, as evidence the company knew exactly what it was doing.

Brown didn’t mince words after Monday’s ruling. “This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” he said in a statement, adding that Kalshi “padded their pockets as they promoted illegal betting on sports, elections, the total number of measles cases this year” and other real-world outcomes. The court agreed that Washington’s Gambling Act — which defines gambling as risking something of value on a contest of chance or a future contingent event for a chance to win money — likely covers what Kalshi is offering.

Part of a Much Bigger Fight

Washington’s win is just the latest swing in a legal battle that has been playing out across the country for over a year. Kalshi and rivals like Polymarket have leaned on the argument that, as a platform regulated by the Commodity Futures Trading Commission, their sports-related “event contracts” are federally preempted financial instruments — not state-regulated gambling products, and therefore immune from state betting laws entirely.

That argument has produced wildly inconsistent results depending on the courtroom. Kalshi scored a notable win in April when the Third Circuit Court of Appeals upheld an injunction blocking New Jersey regulators from enforcing state law against the company, ruling 2-1 that its sports contracts qualify as CFTC-regulated swaps. But Nevada federal courts have gone the other way, ruling the platform isn’t exempt from state gambling oversight, and Arizona has taken the fight further than any other state by filing criminal charges against Kalshi for allegedly running an illegal gambling business. Kalshi is now facing regulatory or legal action in more than a dozen states, and a coalition of dozens of state attorneys general — including Washington’s — has separately challenged the CFTC’s authority to regulate sports-linked contracts at all.

What It Means for Sports Bettors

For sports bettors, the stakes go beyond one company’s legal troubles. Prediction markets have marketed themselves as a workaround for bettors in states with restrictive betting laws or narrower legal sportsbook options, letting users take positions on football, basketball, and other games without a state-licensed sportsbook account. If courts and legislatures ultimately side with states like Washington and Nevada, that access disappears in those markets — pushing bettors back toward licensed operators like the DraftKings promo code and other state-regulated sportsbooks that already comply with local betting laws. If federal preemption arguments win out instead, prediction markets could end up operating nationwide with far less state-level oversight than the traditional sportsbook industry, a scenario licensed operators and state regulators alike have pushed back against hard.

Either way, Washington’s ruling adds another data point to a legal landscape that remains anything but settled, with a final decision from King County still weeks away and plenty of other state cases still working through the courts.