Washington Court Halts Kalshi Sports Prediction Markets

Kalshi faces a major regulatory setback as a Washington state court has granted a preliminary injunction blocking the platform from offering sports-related prediction markets to state residents. Judge McHale rejected federal preemption arguments, ruling that Washington retains authority to regulate Kalshi prediction markets within its jurisdiction. The decision adds to mounting state-level challenges against the platform, with states winning 19 of 23 injunction decisions. However, regulatory pressure has not dampened trading activity, as Kalshi reported $33bn in June trading. The court plans to review additional filings by Aug. 3, with the injunction taking effect no earlier than Aug. 5.

Washington Court Issues Preliminary Injunction Against Kalshi

King County Superior Court Judge John McHale ruled that Washington state demonstrated a likelihood of success in proving Kalshi violated multiple state statutes. The court found violations of the Washington Gambling Act and the Consumer Protection Act, determining that Kalshi operates, develops, manages, finances, and profits from illegal gambling activities in Washington. Judge McHale characterized the platform’s operations as conducting unlicensed gambling games, bookmaking, and professional gambling with respect to betting on sports, elections, politics, entertainment, and culture.

The court rejected Kalshi’s central defense that the Commodity Exchange Act preempts state gambling laws. Judge McHale ruled that regulation of gambling and regulation of futures markets constitute different fields of regulation, noting that Congress did not intend to supersede state jurisdiction in addressing gambling regulation. The judge determined that complying with Washington law would not prevent Kalshi from complying with federal requirements.

Attorney General Nick Brown stated that Kalshi promoted illegal betting on sports, elections, measles cases, witness testimony during child trafficking hearings, and natural disasters. The court found that Kalshi’s advertising claiming to offer “legal betting” in Washington likely misleads reasonable consumers. Judge McHale directed both parties to confer on injunction terms by Aug. 3.

How Kalshi’s Legal Battle Extends Across Multiple States

Kalshi prediction markets face legal challenges spanning more than 20 states, with lawsuits filed from multiple directions. Eight lawsuits originated from state gambling commissions and Indian tribes accusing Kalshi of operating an unlicensed sports gambling platform, while six suits represent Kalshi on the offensive, suing state regulators and contending they fall outside state gambling rules. Five additional complaints came from individuals arguing Kalshi worsens gambling addiction, with four seeking class-action status.

Michigan Attorney General Dana Nessel filed suit earlier this year, arguing the company violated the Michigan Lawful Sports Betting Act. Judge Rosemarie Aquilina granted a temporary restraining order on June 29, stating Michigan’s most vulnerable citizens would suffer immediate and irreparable harm from being exploited by Kalshi’s sports betting operation masquerading as an investment opportunity.

Nevada presents a notable case trajectory. District Judge Andrew Gordon initially granted a preliminary injunction in April 2025 barring state gaming authorities from enforcement. Conversely, Judge Gordon dissolved the injunction in December, holding that certain sports-related contracts closely resemble traditional sportsbook bets and fall within Nevada gaming laws. Carson City District Court Judge Jason Woodbury subsequently extended the ban, describing Kalshi’s sports contract wording as indistinguishable from placing a bet at a state-licensed sportsbook.

Federal courts in Tennessee, Ohio, Connecticut, and New York temporarily paused state enforcement while preliminary injunction motions remain under consideration.

New York Ruling Reinforces State Authority Over Prediction Markets

U.S. District Judge Analisa Torres denied Kalshi’s motion for a preliminary injunction that would have blocked New York state regulators from enforcing gambling laws against the prediction market platform. The ruling, issued late Tuesday, found that Kalshi failed to demonstrate likelihood of success on preemption claims under the Commodity Exchange Act.

Torres pointed to a provision in Section 2 of the Commodity Exchange Act stating that nothing in the section shall supersede or limit jurisdiction conferred on other regulatory authorities under state laws. The judge wrote that this provision evidenced Congress did not intend to regulate so broadly as to exclude all state gambling laws from regulating transactions involving swaps.

Kalshi sued New York officials in October 2025 after receiving a cease-and-desist letter for offering sports gambling without a license. Torres noted that New York law requires any gambling enterprise offering sports gaming to obtain a license from the Gaming Commission. The judge emphasized nothing prevents Kalshi from obtaining a license pursuant to New York law.

Governor Kathy Hochul and Attorney General Letitia James issued a joint statement Wednesday morning celebrating the victory. Kalshi is appealing the decision to a higher court. Meanwhile, New York has proposed the ORACLE Act legislation designed to regulate prediction exchanges more tightly. The CFTC preemptively countersued the state to block enforcement of any laws claiming to usurp federal authority.