Washington Court Bars Kalshi Sports Contracts, Rejects CEA

A Washington state judge granted a preliminary injunction preventing Kalshi from offering certain sports-event contracts after concluding the state is likely to succeed on claims that the products violate Washington gambling laws and that the Commodity Exchange Act does not preempt state regulation.

The court described Kalshi’s online prediction markets as unlicensed gambling and wrote that the company “transacts business in King County by offering, operating, conducting, marketing, promoting, and/or distributing unlicensed and illegal gambling activities” and “knowingly accepts and receives money from Washington consumers through its online betting platform.” The order added that Kalshi “profits from its betting platform.”

The court found the state showed a likelihood of success on claims under the Revised Model Law on Gaming Activities and multiple provisions of the Washington Gambling Act, including prohibitions on bookmaking and professional gambling. The order also said Kalshi’s advertising may mislead consumers by suggesting the activities are legal under state law.

Kalshi had argued that the federal Commodity Exchange Act preempts state gambling rules. The judge rejected that argument, writing “the Commodity Exchange Act (CEA) does not preempt Washington State gambling law.” The opinion said regulation of gambling and regulation of futures markets are separate and referenced a CFTC rule that bars contracts involving gaming or activities unlawful under state or federal law.

On the balance of harms, the court wrote that “the public interests at stake and potential harm to consumers in the continued operation of Kalshi’s online gambling activities in the State of Washington outweigh harm to Kalshi.” The judge concluded Washington had shown irreparable harm if Kalshi continued to operate during the litigation.

Washington’s injunction is the fourth preliminary order issued against Kalshi. Courts in Massachusetts, Nevada and Michigan previously blocked Kalshi’s sports-event contracts. Massachusetts obtained an injunction that was later stayed pending appeal. Nevada ordered Kalshi to stop offering contracts tied to sports, entertainment and elections and the Nevada Gaming Control Board has sought to hold the company in contempt. In Michigan, a court extended a temporary restraining order and gave Kalshi until Aug. 12 to implement geofencing for sports contracts or face a $500,000-per-day fine.

The Washington court reserved the exact terms of its injunction and directed the parties to meet and confer on scope and language. Proposed terms are due Aug. 3 and the judge indicated an intent to enter a final order by Aug. 5.

Gambling attorney Daniel Wallach noted courts have issued 23 decisions on preliminary injunctions or temporary restraining orders in related prediction market cases, with states prevailing in 19 of those rulings.