A Washington state judge has ordered prediction market platform Kalshi to stop offering its event contracts in the state, ruling that the company is likely operating in violation of Washington’s gambling laws.
The decision was issued on Monday by Judge John McHale of the King County Superior Court. The judge granted the state’s request for a preliminary injunction, preventing Kalshi from continuing to offer its event-based contracts while the legal case moves forward.
In his ruling, McHale said Washington had shown a strong likelihood that consumers could suffer harm if the platform continued operating without restrictions. He also concluded that protecting the public interest outweighed any potential business impact on Kalshi.
The judge said the state demonstrated a likelihood of actual and substantial injury to consumers from activities that could qualify as illegal gambling under Washington law.
The latest ruling adds Washington to a growing list of states that have secured court orders limiting Kalshi’s operations. Massachusetts, Michigan, and Nevada have also obtained legal decisions restricting the company’s activities.
Earlier this month, New York also won a similar court order after a federal judge rejected Kalshi’s request to block enforcement of that state’s gambling laws.
Kalshi has argued that its products are not traditional gambling activities. The company maintains that it operates regulated prediction markets under the oversight of the U.S. Commodity Futures Trading Commission, commonly known as the CFTC.
The CFTC has taken the position that it has exclusive authority to regulate prediction markets in the United States. The agency has challenged actions taken by several states that have attempted to regulate or restrict companies operating in the sector.
According to court filings, the CFTC has opposed regulatory efforts in at least nine states involving prediction market platforms.
A federal appeals court also ruled earlier this year that the CFTC has authority over certain prediction market products. In April, the court blocked New Jersey gaming regulators from enforcing state regulations against Kalshi’s sports event contracts.
Following the Washington ruling, Kalshi criticized the state’s legal action. In a public statement, the company said states do not have authority to regulate prediction markets and expressed disappointment with the court’s decision.
The company also argued that the legal dispute involves unnecessary public spending while broader questions about federal oversight remain unresolved.
Prediction markets allow users to buy contracts based on the outcome of future events. Participants can trade contracts linked to sports competitions, elections, economic indicators, and other real-world events.
The industry has grown rapidly over the past two years. Interest increased significantly following the 2024 United States presidential election, when several prediction markets attracted attention for forecasting election results.
Supporters argue that prediction markets can provide useful information by reflecting the expectations of large numbers of participants. Critics, however, continue to debate whether the products resemble financial trading or traditional gambling.
The sector has also expanded into major sporting events. According to market data, approximately $19.04 billion in trading volume was recorded across Kalshi and Polymarket during the recently completed FIFA World Cup.
The Washington ruling does not permanently resolve the legal dispute but prevents Kalshi from offering its event contracts in the state while the case continues.
As similar lawsuits move through courts across the United States, the legal battle over prediction markets is expected to shape how these platforms are regulated in the future. The outcome could clarify the balance between federal oversight and state gambling laws for this growing industry.
