Washington state has issued a preliminary injunction against Kalshi, preventing it from offering sports-related contracts due to violations of state gambling laws, marking another judicial setback for sports prediction markets nationwide.
Legal Rulings and Federal-State Conflict
Judge John McHale of King County Superior Court ruled that Kalshi's sports prediction offerings constitute illegal gambling under Washington law. The court rejected Kalshi's argument that the federal Commodity Exchange Act preempts state gambling regulations, a key point that affects similar cases beyond Washington.
The injunction will come into effect on or after August 5, following a review of additional materials scheduled for August 3. The judge indicated that Kalshi's previous negotiations with other states might help find consumer protection solutions before enforcement begins.
Kalshi, federally registered with the Commodity Futures Trading Commission (CFTC), contends that CFTC oversight excludes state gambling laws from applying to its products. However, this position has not prevailed in courts so far.
Broader Legal Landscape
Across the country, states have won 19 out of 23 rulings concerning injunctions against sports prediction markets, according to attorney Daniel Wallach. Kalshi is already barred from offering sports contracts in Nevada and Michigan. New York recently rejected Kalshi's attempt to block state enforcement.
The Washington ruling aligns with this emerging pattern of state-level resistance, signaling coordinated regulatory challenges for sports prediction platforms.
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