Washington judge blocks Kalshi sports contracts in state gambling blow

A Washington judge has temporarily blocked Kalshi from offering sports-related event contracts in the state, ruling the federally regulated prediction market operates illegal gambling activities. Judge John McHale of King County Superior Court granted a preliminary injunction on Monday, finding that the Commodity Exchange Act does not preempt Washington state law.

"[It] offers illegal gambling activities to Washington consumers and solicits bets from Washington consumers on its platform," Judge McHale wrote. "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."

Kalshi firmly rejected the premise that states hold authority over its operations. "States don't have jurisdiction to regulate prediction markets," a Kalshi spokesperson said. "Many courts — including the Third Circuit — have made this clear. We're disappointed to see Washington state continue wasting taxpayer dollars."

The ruling underscores a deepening rift between state gambling regulators and the Commodity Futures Trading Commission, which oversees Kalshi. The CFTC sued New York in April seeking a declaratory judgment that federal law grants it exclusive authority over event contracts. For investors, this jurisdictional clash creates prolonged regulatory uncertainty around a major growth vector for the exchange.

Washington is the latest state to successfully restrict Kalshi's sports offerings. According to sports and gaming attorney Daniel Wallach, states have won 19 out of 23 judicial decisions on preliminary injunctions or temporary restraining orders in prediction market cases. "The tide is turning sharply in the states' favor," Wallach said.

Kalshi currently dominates the prediction market sector by trading volume, processing $33 billion in June compared to the $13.95 billion handled by rival Polymarket. However, its operational map for sports contracts is shrinking rapidly. The platform is already barred in Nevada and Michigan, and a New York judge recently denied Kalshi's request to block state enforcement.

The Washington injunction will not take effect until at least Aug. 5 to allow the court to review additional materials. Wallach noted that while the Supreme Court is expected to ultimately settle the federal versus state question within a few years, Kalshi's sports footprint "could look markedly different in six months" due to the barrage of state-level injunctions.