State judge orders Kalshi to stop offering sports bets and other wagers
A Washington state judge has ordered prediction-market operator Kalshi to stop offering a wide range of wagers to people in the state, including bets on sports, elections, entertainment and technology. The preliminary injunction is significant because it rejects, at least for now, Kalshi’s argument that federal regulation by the Commodity Futures Trading Commission overrides state gambling laws.
The court found Washington is likely to succeed in claims that Kalshi’s platform and advertising violate state gambling and consumer-protection laws, noting it is neither licensed by the state Gambling Commission nor registered to do business there. Kalshi must introduce IP- and residency-based geofencing by 19 August, followed by a more comprehensive system by 2 September, or face penalties of up to $120,000 a day; users may still close existing positions. Kalshi said it disagrees with the ruling and is considering legal options, amid wider disputes between states, the federal government and prediction-market platforms.
In short
- Washington judge orders Kalshi to halt many wagers in the state.
- Geofencing must be completed by 2 September.
- Kalshi disputes the ruling and may appeal.
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The case for
Prediction markets serve legitimate economic functions by aggregating information, much like commodity futures, and are already regulated by the Commodity Futures Trading Commission under federal law. Requiring separate state licensing imposes substantial compliance burdens and creates regulatory fragmentation that conflicts with established federal oversight; permitting states to veto federal regulatory frameworks through state gambling laws undermines the coherence of national financial markets.
The case against
States retain fundamental constitutional authority to regulate gambling and protect consumers within their borders, and Kalshi operates without state licensing or the consumer protections and responsible gambling measures that state oversight provides. Allowing federal regulation to wholly preempt state gambling law creates a regulatory vacuum that platforms could exploit, fundamentally undermining states' long-standing capacity to address problem gambling and safeguard vulnerable consumers.
Explained simply
Kalshi is a company that lets people trade contracts linked to the outcome of future events, such as elections, sports matches or economic indicators. A contract pays out according to what happens, so its value can rise or fall as people trade.
In the United States, companies offering gambling services have generally been subject to state laws, while some financial markets are regulated federally. Kalshi says its event contracts fall under federal oversight by the Commodity Futures Trading Commission; states have argued that some of these products amount to gambling and must follow state rules.
The dispute matters because courts are being asked to decide how those federal and state powers apply to prediction markets. The outcome could affect which event contracts these platforms can offer and where they can operate.