Washington judge corners Kalshi, setting up another state-fed showdown

(CN) — A Washington state judge ruled against Kalshi on Monday, ordering the prediction market to cease operations in the state next month over violations of two state laws.

King County Superior Court Judge John McHale granted a motion for a preliminary injunction after determining Kalshi wasn’t in compliance with the Washington State Gambling Act and the state’s Consumer Protection Act. McHale’s order didn’t include the specific terms of the preliminary injunction, with Kalshi’s attorneys and the state to come up with a plan by Aug. 5, including the “language and scope” of the injunction.

“The public interests at stake and potential harm to consumers in the continued operation of Kalshi’s online gamblingactivities in the state of Washington outweigh harm to Kalshi,” he wrote in his 14-page order.

Kalshi is a platform where gamblers can bet on thousands of topics ranging from entertainment, sports, elections and even war. Some bets are very specific, such as when and if a public figure will say a certain word or phrase at an event, creating a breeding ground for insider trading scandals.

Founded by MIT graduates Tarek Mansour and Luana Lopes Lara, Kalshi launched its web-based prediction market platform in July 2021 and allows users to buy and sell what it calls “event contracts.”

On Dec. 9, 2025, the Washington Gambling Commission issued a notice to Kalshi saying the prediction market and events contracts are not authorized in the state.

“Kalshi’s advertisements that it offers ‘legal betting’ in Washington state are likely to mislead a reasonable consumer that such gambling activities are legal under state law,” McHale wrote.

“This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” said Washington Attorney General Nick Brown in a statement. “Kalshi padded their pockets as they promoted illegal betting on sports, elections, the total number of measles cases this year, what will witnesses say during a child trafficking hearing and even natural disasters.”

In April, a Nevada judge granted a temporary restraining order against Kalshi and blocked rival prediction market Polymarket in June. Massachusetts won a preliminary injunction against Kalshi in February, and earlier this month Kalshi lost a bid to block New York from regulating prediction markets.

In defense, Kalshi says federal law preempts state regulations and the company, with the support of the Trump administration, is part of a large legal network of commodities and futures markets. The prediction market won immunity from state oversight in the Third Circuit in April when a panel ruled only the federal government — not New Jersey — can regulate the rapidly growing industry.

“States don’t have jurisdiction to regulate prediction markets,” a Kalshi spokesperson said in an email to Courthouse News. “Many courts — including the Third Circuit — have made this clear. We’re disappointed to see Washington state continue wasting taxpayer dollars.”