Judge John McHale of King County Superior Court in Washington granted a preliminary injunction against prediction market platform Kalshi on Monday, ruling that the company operates illegal gambling activities under state law. The court determined that Kalshi offers illegal gambling to Washington consumers and solicits bets from state residents through its sports-related event contracts. The ruling reflects a broader regulatory conflict between state gambling enforcement and federal commodity market oversight, with states winning 19 of 23 similar cases according to sports and gaming attorney Daniel Wallach.
Washington Court Blocks Kalshi Sports Contracts
According to the court document filed Monday, Judge McHale granted the state's motion for a preliminary injunction against Kalshi. The judge wrote that Kalshi "offers illegal gambling activities to Washington consumers and solicits bets from Washington consumers on its platform." The court stated that "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."
Court Cites State Gambling Law Violations
The dispute centers on whether Kalshi's sports event contracts fall under federal regulation or state gambling laws. The state argues that the contracts violate state gambling laws, while Kalshi contends that the federal Commodity Exchange Act (CEA) preempts those laws. In the Monday filing, Judge McHale explicitly wrote that the CEA does not preempt Washington state. A Kalshi spokesperson responded that "states don't have jurisdiction to regulate prediction markets" and cited Third Circuit rulings supporting this position.
Injunction Takes Effect No Earlier Than Aug. 5
The court will review additional materials from Kalshi and the state by Aug. 3. The preliminary injunction will not take effect until at least Aug. 5. Judge McHale stated that "the Court will allow the parties to confer with the hope that Kalshi, through experience with other States, may provide insight into effective ways to protect Washingtonians as the State seeks to do."
States Win 19 of 23 Prediction Market Cases
Sports and gaming attorney Daniel Wallach told The Block that Judge McHale's Monday ruling aligns with the approach taken by most courts that have considered similar cases. Wallach stated that "to date, there have been 23 judicial decisions on whether a preliminary injunction or temporary restraining order should be issued in connection with prediction-market cases. The states have won 19 out of 23." He added that "the tide is turning sharply in the states' favor."
Last month, a Michigan judge issued a temporary restraining order against Kalshi, blocking the platform from offering sports-related event contracts in the state. Earlier this month, a judge in New York denied Kalshi's request to block the state from enforcing its gambling laws against the prediction market platform. Wallach pointed out that Kalshi is already barred from offering sports-event contracts in Nevada and Michigan, with Washington poised to become another state on the list.
CFTC Challenges State Enforcement
The CFTC sued New York in April to block state enforcement against CFTC-registered exchanges. The agency is seeking a declaratory judgment that federal law grants it exclusive authority over event contracts, according to its statement. Kalshi is federally regulated by the CFTC.
Kalshi Leads Market With $33 Billion June Volume
Kalshi remains the largest prediction market platform in the world in trading volume, ahead of rival Polymarket. Kalshi's monthly volume reached $33 billion in June, while Polymarket and its U.S. platform saw a combined $13.95 billion, according to The Block's data dashboard.
FAQ
What did the Washington court rule about Kalshi on Monday?
Judge John McHale of King County Superior Court granted a preliminary injunction against Kalshi on Monday, ruling that the company operates illegal gambling activities under Washington state law by offering sports-related event contracts to state residents.
When does the Washington injunction against Kalshi take effect?
The preliminary injunction will not take effect until at least Aug. 5. The court will review additional materials from Kalshi and the state by Aug. 3 before finalizing the order.
How many prediction market cases have states won against platforms like Kalshi?
According to sports and gaming attorney Daniel Wallach, states have won 19 out of 23 judicial decisions involving preliminary injunctions or temporary restraining orders in prediction market cases.
