Washington Court Bans Kalshi Prediction Markets Over Gambling Laws

King County Superior Court Judge John McHale issued a preliminary injunction ordering the prediction market platform Kalshi to cease most of its operations in Washington state. The ruling follows a March lawsuit by Attorney General Nick Brown, who alleged the company operated an illegal gambling operation and willfully ignored a December 2025 warning from the Washington State Gambling Commission.

By September 2, Kalshi must implement IP and residency-based geofencing to block Washington residents from wagering on sports, elections, politics, entertainment, culture, tech, and science. The company is also prohibited from advertising these restricted wagers to state consumers. Failure to comply will result in daily penalties of $120,000. The court allowed Kalshi to continue offering derivatives-related categories, including commodities, climate, economics, and finance.

Kalshi argues that the United States Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over its exchange. CFTC Chair Michael S. Selig supported this position, stating that federal law preempts a patchwork of state gaming laws for financial exchanges. Kalshi is currently considering legal options after the Washington Court of Appeals denied a request to stay the injunction. This case is part of a broader trend of state-level crackdowns on prediction markets, with similar legal challenges occurring in New York, Minnesota, and Nevada.