Kalshi Ordered to Block Betting Activity in State of Washington

A judge in Washington has issued an order that will cease nearly all activity by Kalshi in that state.

“Kalshi operates an online betting platform,” wrote King County Superior Court Judge John McHale in his preliminary injunction filed on Thursday. Kalshi has until August 19 to remove markets from its app available in Washington that McHale says constitute betting.

Kalshi allows customers to purchase event contracts that are triggered if something happens, such as the result of an election, a sporting event, or the performance of stocks. If the contracts pan out for the consumer, they receive a payment that critics say is basically a payout from a bet.

McHale's injunction orders Kalshi to stop offering betting contracts on sports, politics, entertainment, and culture events. The company can still offer prediction markets on financial matters.

Washington joins a handful of states that have ordered Kalshi to stop offering its markets. Late last year, Michigan and Minnesota forced Kalshi to cease. However, the federal government, which has sanctioned Kalshi and its competitor Polymarket, promises to sue states that interfere. A lengthy, contentious court battle seems destined between states and the feds. No fewer than nine states have been sued by the federal government over restrictions placed on prediction markets.

Washington has restrictive laws regarding gambling apps. Sportsbooks are only permitted when the user is on tribal-owned lands via a licensed, state-approved app. Users cannot place bets on college sporting events that take place in-state or involve Washington-based schools.

Kalshi has popped up in several states, emboldened by support from the Trump administration. The Commodity Futures Trading Commission under Trump has taken action to legitimize prediction markets like Kalshi and Polymarket. Those companies argue that only the CFTC and federal government has regulatory oversight of their markets.

In recent months prediction markets have come under scrutiny for their broadening of markets. In some cases, consumers can buy contracts that hinge on whether an official or political candidate will say a certain thing. These so-called "statement markets" are even drawing the attention of Trump administration officials.

In many cases, the prediction markets are tied to sporting events, like teh World Cup tournament, which was contested earlier this summer in several locations in the United States, Canada, and Mexico, including Seattle.

The issue of prediction markets is complicated by the investments made by Donald Trump Jr. in both Kalshi and Polymarket.

Nick Brown, the Attorney General for the State of Washington, is prepared to challenge the federal government and the Kalshi over their operations in his state. He sees these apps as a threat to consumers who don't realize that they are partaking in illegal gambling activity.

“Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more,” Brown explained in a statement that responded to Judge McHale's injunction. “As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”