A Washington judge has ruled that prediction market operator Kalshi likely violated the state’s gambling and consumer protection laws, paving the way for a preliminary injunction that could require the company to stop offering its event-based contracts to Washington residents while the lawsuit moves forward.
King County Superior Court Judge John McHale found Washington is likely to prevail on key claims in its case against Kalshi and determined consumers face a likelihood of “actual and substantial injury” if the company’s operations continue during the litigation. The judge granted the state’s request for a preliminary injunction and said the final terms will be issued on August 5 after additional briefing from both parties.
Attorney General Nick Brown described the decision as an important early victory for the state.
“This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” Brown said in an accompanying 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.”
McHale’s order says Kalshi runs an online platform where users “place bets on the outcome of various events,” spanning sports, elections, politics, entertainment, finance and other subjects. According to the ruling, customers buy “yes” or “no” positions on future events, receive payouts if they are correct, lose their money if they are wrong, and Kalshi collects a transaction fee on every wager. The judge concluded each contract “risks money, relies in part on chance, and promises a payout to winners.”
The court also rejected Kalshi’s argument that its federally regulated prediction market is shielded from Washington’s gambling laws. McHale ruled the Commodity Exchange Act does not preempt the state’s gambling statutes and found that complying with Washington law “would not prevent Kalshi from complying with applicable Federal law.”
Washington gains major early victory against Kalshi after judge backs state
McHale also found the state’s consumer protection claims were likely to succeed, concluding Kalshi’s advertising may mislead Washington residents. The order states the company’s claims that it offers “legal betting” in Washington “are likely to mislead a reasonable consumer” about whether the activity is lawful. The judge further concluded that “Kalshi’s provision, marketing, and advertising of illegal gambling activities constitute unfair and/or deceptive acts or practices” under the Washington Consumer Protection Act.
Among the examples cited was an advertisement in which a customer said they “found a way to bet on the NFL even though we live in Washington.” The court said Kalshi continued targeting Washington consumers even after the Washington State Gambling Commission warned in December 2025 that event-based contracts were not authorized in the state.
The guidance prohibited both operators and residents from offering or participating in prediction markets. At the time, the commission said sports wagering remained legal only through authorized tribal casinos and noted that litigation around prediction markets in other states could shape future policy.
McHale also found Washington was likely to succeed on claims that Kalshi violated multiple provisions of the Washington Gambling Act, including illegal online gambling, bookmaking and professional gambling.
The dispute has already involved a fight over jurisdiction. After Washington filed its lawsuit in King County Superior Court earlier this year, Kalshi removed the case to federal court, arguing it operates a federally regulated derivatives exchange overseen by the Commodity Futures Trading Commission and that the dispute belongs under federal law. Washington maintains the platform functions as illegal gambling under state law despite that federal oversight.
The order also directs Kalshi to preserve records relating to Washington customers while the case continues. Both sides must submit proposed injunction language before McHale issues the final order.
Featured image: Kalshi / Canva
