Judge Orders Kalshi to Stop Most Prediction-Market Operations in Washington State

A King County judge has ordered Kalshi to stop most of its prediction-market operations in Washington state by the middle of next week, ruling that the company has been running an illegal gambling operation under state law. King County Superior Court Judge John McHale’s order requires Kalshi to geofence Washington users out of markets covering sports, elections, politics, entertainment, culture, tech, science, and so-called “mention” contracts by September 2.

The ruling is the latest and most consequential development in a legal fight that Washington Attorney General Nick Brown launched in March, when his office sued Kalshi for allegedly violating the state’s gambling laws. Brown’s case leaned heavily on Kalshi’s own marketing, which had promoted the platform’s ability to let users “bet on everything.”

Judge Rejects Kalshi’s Federal Preemption Defense

Kalshi’s central legal argument throughout the case has been that the Commodity Futures Trading Commission holds exclusive jurisdiction over its exchange, making state gambling laws irrelevant to how it operates. McHale rejected that defense back on July 21, when he granted a preliminary injunction and found that Washington had shown “a likelihood of actual and substantial injury to Washington consumers from illegal gambling activities” if the platform kept operating unchecked.

In his written order, McHale said Kalshi “willfully ignored” a December 2025 notice from the Washington State Gambling Commission stating that event-based contracts were not authorized in the state. He also concluded that the public interest and potential harm to consumers outweighed any harm to Kalshi from being restricted. Kalshi has continued to argue publicly that “states don’t have jurisdiction to regulate prediction markets” and has called the case a waste of taxpayer dollars.

Part of a Bigger Multi-State Legal Battle

Washington now joins Michigan and Nevada as states with active court-ordered restrictions on Kalshi, while a similar order in New York and a Massachusetts case add to the mounting pressure the company is facing nationwide. Kalshi has escalated its defense by bringing in former U.S. Acting Solicitor General Neal Katyal as lead counsel in the Washington case and has already appealed to the Washington Court of Appeals, though both that court and McHale denied requests to pause the injunction while the appeal plays out.

The stakes for missing the deadline are steep — McHale’s order sets a $120,000-per-day penalty if Kalshi fails to comply by September 2, mirroring a penalty Nevada regulators are separately pursuing in a contempt motion there. Kalshi will still be allowed to offer markets tied to commodities, climate, economics, and finance in Washington, and users can close out existing positions in the now-prohibited categories. The company disputes being lumped in with rival Polymarket on contentious markets, saying it does not offer contracts tied to wildfires, war, death, or terrorism.

For bettors following the broader prediction-market landscape, the Washington ruling underscores just how unsettled the legal picture remains state by state — worth keeping in mind for anyone comparing platforms through resources like this legality guide or a head-to-head look such as Kalshi vs. Polymarket before deciding where to trade.

What Comes Next

Kalshi’s remaining options include asking a full Washington Court of Appeals panel to review the commissioner’s earlier denial or seeking emergency review from the Washington Supreme Court. In the meantime, the company has roughly a week to build out an IP address and residency-based geofencing system, followed by a more robust multi-source geofencing solution due by September 2 — the same deadline by which its Washington-restricted markets must be shut down entirely.