Kalshi’s string of state-to-state pushback sees Washington State join the list as Judge John F. McHale (July 17-20) grants a motion for a preliminary injunction. The grounds: Kalshi is likely violating the Gambling and Consumer Protection Acts.
Deeming its operations as an unlicensed, illegal online gambling platform. All the while rejecting Kalshi’s core defense that the federal Commodity Exchange Act (CEA) and CFTC regulation preempt state gambling laws. The court concurred with AG Nick Brown’s office's assertion that continued operation could pose a substantial risk of harm to WA consumers. So, what does that mean for Kalshi?
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Kalshi Dealt Major Blow in State of Washington V KalshiEX, LLC Lawsuit
It’s official: Kalshi was just dealt its biggest blow yet in Washington State with a preliminary injunction issued in State of Washington v. KalshiEX, LLC lawsuit that ran July 17-20 in the King County Superior Court. If you’re new to it, Kalshi is one of the top-rated CFTC-regulated platforms on the
list of prediction markets; it operates as a designated contract market (DCM) serving binary “event contracts" (in YES/NO positions) on future event outcomes.
So how did we get here?
- On December 9, 2025, the Washington State Gambling Commission (WSGC) formally issued public guidance asserting that “prediction markets (offering events-based contracts) and participating in said markets are not legal/authorized in the state.”
- Fast-forward to March 27, 2026, AG Nick Brown’s office, relying on the notice, filed a lawsuit in King County Superior Court alleging that Kalshi’s event contract constituted illegal gambling.
- Shortly after, Kalshi swiftly moved the case to the US District Court for the Western District of Washington, with a push-and-pull ensuing through roughly ~April and May, with a Motion for Remand filed by the state and granted by Judge John C. Coughenour. Kalshi did try to appeal the remand to the Ninth Circuit (sought a stay), but the request was denied.
- With the remand active, the case ultimately returned to state court: the King County Superior Court, where, circa July 20th, 2026, Judge McHale deemed Kalshi’s contracts likely to constitute illegal gambling and signed/filed the Order Granting the State’s Motion for Preliminary Injunction.
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As for the specific terms of the injunction, the court set a later date to lay out terms on geofencing of WA residents, restrictions on particular categories of contracts, and how existing contract positions will be handled, among other measures. Still, Kalshi pulled one more card in late July, moving to pause (stay) the injunction pending appeal, on the grounds that it faced conflict between enforcing state and federal duties. To date, there haven’t been any updates, and the preliminary injunction grant itself remains in place.
Kalshi’s Contracts Now Illegal in Washington State
Kalshi’s setbacks continue, with preliminary injunctions against its sports-related products and other event contracts now in place in Massachusetts, Michigan, Nevada, New York, and, most recently, Washington. While the finer details are being aired out, alongside Kalshi’s move to stay the injunction, the order is still in place, and Kalshi’s contracts are deemed illegal gambling in WA state.
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