A King County Superior Court judge has ordered Kalshi to stop offering wagers on sports, elections, and several other categories to Washington consumers, finalizing a preliminary injunction the state’s attorney general’s office secured against the prediction market operator.
The initial ruling on the preliminary injunction last month, which concluded that Kalshi “likely” violated state gambling laws.
Washington becomes the sixth state to win a ruling to limit what Kalshi can offer.
“Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more. Under this order, Kalshi is banned from offering wagers on most of those topics in Washington,” Atty. Gen. Nick Brown said in a statement. “As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”
Why the court ruled against Kalshi
Since Kalshi is federally regulated by the Commodity Futures Trading Commission, it believes its products fall under exclusive federal jurisdiction, putting them out of reach of state gambling law. However, the court found gambling regulation and futures market regulation are separate lanes that don’t conflict with each other.
Judge John McHale wrote in the court order that “regulation of gambling and regulation of futures markets are different fields of regulation,” and that Kalshi functions as traditional gambling.
Washington’s gambling law defines gambling as staking or risking something of value on the outcome of a contest of chance or a future contingent event. McHale found Kalshi’s trades fit that definition, since each wager risks money, relies in part on chance, and promises a payout to winners.
The two laws, Washington’s gambling statute and the federal Commodity Exchange Act, do not conflict, McHale ruled, meaning Kalshi can comply with both at the same time.
What the order requires
Kalshi must implement an IP address and residency based geofence by Aug. 19. A full-scale multi-source geofencing solution is required by Sept. 2.
Failure to comply would trigger a $120,000-per-day penalty if the operator misses the Sept. 2 deadline without showing “sufficient diligence.”
Kalshi must also keep all records pertaining to logs, communications, geolocation determinations and marketing data. It is also barred from local advertising and marketing targeted to residents and must make a good-faith effort to exclude Washington from national campaigns.
The prediction market is no longer allowed to offer mention markets, either.
Another win for the states
U.S. states have been racking up court victories against Kalshi as of late.
Massachusetts, Michigan, Nevada, New York and Utah are all instances where the courts sided with state gambling laws being enforced.
Whether those victories actually matter could be tested soon. The CFTC ordered Kalshi to continue its operations in New York despite the ruling.
