A Washington state judge has granted a preliminary injunction blocking Kalshi from offering sports event contracts to residents, ruling that the platform constitutes illegal gambling under state law. King County Superior Court judge John McHale determined that Kalshi “offers illegal gambling activities to Washington consumers,” marking a significant legal setback for the prediction market operator.
The injunction, issued by the King County Superior Court, prevents Kalshi from soliciting or accepting bets on sports events from Washington-based users while the case proceeds. The court’s decision stems from a lawsuit alleging that Kalshi’s sports event contracts violate Washington’s strict anti-gambling statutes, which prohibit most forms of wagering outside of tribal casinos and a limited state lottery. Kalshi, which operates as a federally regulated prediction market under the Commodity Futures Trading Commission (CFTC), has argued that its contracts are legal derivatives, not gambling. However, Judge McHale sided with state prosecutors, finding that the platform’s offerings fall within the definition of illegal gambling under Washington law.
The ruling adds to the ongoing legal and regulatory uncertainty surrounding prediction markets in the United States. While platforms like Kalshi and Polymarket have gained traction by allowing users to trade on the outcomes of events ranging from elections to sports, they have faced scrutiny from state regulators who view them as unlicensed gambling operations. Washington is among the most restrictive states for gambling, with no commercial casinos or legal sports betting, making it a particularly challenging jurisdiction for such platforms. The CFTC has also been examining the classification of event contracts, with some commissioners arguing they resemble gambling rather than hedging instruments.
The preliminary injunction is a notable blow to Kalshi’s expansion efforts, as it restricts access to a significant U.S. state and could embolden other jurisdictions to take similar action. For Washington consumers, the ruling reinforces the state’s prohibition on sports wagering, while for the broader prediction market industry, it highlights the legal risks of operating in states with stringent gambling laws. The decision may also influence how other states and the CFTC approach the regulation of event-based contracts.
Observers will watch for further developments in the case, including whether the injunction is appealed or leads to a permanent ban. The outcome could set a precedent for how prediction markets are treated under state gambling laws across the country.