The fight over prediction markets just cost Kalshi a big chunk of its business in Washington state.
On Thursday, the office of Attorney General Nick Brown announced that King County Superior Court Judge John McHale had issued a final order requiring the New York-based exchange to stop advertising, conducting or facilitating trading of event contracts tied to sports, elections, politics, entertainment, culture, technology, science and so-called "mention markets" — wagers on whether public figures will say specific words. Commodities, climate, economics and finance markets are exempt.
The order also requires Kalshi to implement IP-address and residency-based geofencing in the state by Aug. 18, followed by a broader multi-source geofencing solution by Sept. 2.
"This does not include all the wagers offered on Kalshi, but it includes a substantial part of their business, which in recent years has been increasingly driven by sports wagers," the AG's office said.
Washington is now the third state with active restrictions on Kalshi, after Michigan and Nevada, and the ruling is the latest setback in a broader legal war over prediction markets. The case began in March, when Brown sued after the Washington State Gambling Commission warned in December that sports prediction markets were not permitted. Washington banned internet gambling in 2006, and sports betting is legal only in person at tribal casinos.
McHale granted a preliminary injunction in July, ruling the state "has shown a likelihood that Kalshi's conduct violates multiple provisions of the Washington Gambling Act," and rejecting Kalshi's argument that oversight by the U.S. Commodity Futures Trading Commission preempts state gambling laws. The Washington Court of Appeals later denied Kalshi's request to stay the injunction.
Kalshi — which markets itself as a federally regulated exchange and takes a fee on every bet — disagrees with the ruling. "We respectfully disagree with the court's decision and are considering all legal options," spokesperson Jacki McGavick said.
"The definition of gambling under Washington law is 'staking or risking something of value upon the outcome of a contest of chance or a future contingent event,' and Kalshi's activities fall squarely within that definition," Thursday's announcement said. "Each Kalshi bet risks money, relies in part on chance, and promises a payout to winners."
Kalshi faces possible restrictions in other states as well, with litigation pending elsewhere and a Massachusetts action on hold.
