Seattle judge deals blow to Kalshi, rejects prediction marketโs federal defense

A judge in Seattle issued a preliminary injunction against Kalshi, finding that Washington state is likely to prove that the fast-growing prediction market is running illegal online gambling.
The ruling by King County Superior Court Judge John McHale, issued Monday, does not immediately halt Kalshiโs operations in the state. McHale granted the injunction in the case brought by Washington AG Nick Brown, but deferred the specifics until early next month.
McHale rejected Kalshiโs argument that oversight by the U.S. Commodity Futures Trading Commission preempts state gambling laws. That has been the basis of Kalshiโs defense against regulators across the country. Washington is the latest state where a court has shot it down.
Kalshi quickly pushed back on the ruling.
โStates donโt have jurisdiction to regulate prediction markets. Many courts โ including the Third Circuit โ have made this clear,โ spokesperson Jacki McGavick said in a statement. โWeโre disappointed to see Washington State continue wasting taxpayer dollars.โ
In his ruling, McHale said Kalshi โwillfully ignoredโ a December 2025 notice from the Washington State Gambling Commission that event-based contracts were not authorized in the state, and cited a Kalshi ad showing a text exchange where one user tells another: โI found a way to bet on the NFL even though we live in Washington.โ
Kalshiโs platform lets users bet โyesโ or โnoโ on thousands of events across sports, elections, entertainment, and so-called โmention marketsโ โ wagers on whether public figures will say specific words. The New York-based company, which markets itself as a federally regulated โprediction market,โ takes a transaction fee on each bet.
Washington has some of the strictest gambling laws in the country: the legislature banned internet gambling in 2006, and while the state allows a lottery, horse racing, and tribal-casino gambling, online betting is broadly prohibited and sports wagers are legal only in person on tribal lands.
The order requires Kalshi to preserve all records tied to Washington users, including logs, communications, geolocation data and marketing materials.
The specific operational terms of the injunction are still being determined: McHale gave both sides until Aug. 3 to submit proposed language, with a full order to follow by Aug. 5.