Kalshi Ordered to Stop Most Operations in Washington State

A King County Superior Court judge ordered Kalshi, the online prediction market platform, to stop most operations in Washington by the middle of next week after finding the company runs an illegal gambling operation under state law. Judge John McHale issued the ruling on Thursday, August 13, 2026, placing severe restrictions on the company’s business activities in the state.

The preliminary injunction requires Kalshi to stop accepting bets or contracts in Washington on anything related to sports, elections, politics, entertainment, culture, technology, and science. The company may continue accepting bets or contracts on topics including economics, finance, climate, and commodities, according to McHale’s order. Kalshi must implement an IP address and residency-based geofence by August 19 and deploy a multi-source geofencing solution by September 2.

Attorney General Nick Brown sued Kalshi in March, accusing the company of violating Washington’s relatively strict anti-gambling laws and using the company’s own advertising to prove the point. The platform had boasted that it allowed people to “bet on everything”, which prosecutors used as evidence of illegal gambling operations.

Court Finds Gambling Law Violations

“Kalshi operates an online betting platform,” Judge McHale wrote in the preliminary injunction Thursday, adding that the company likely is violating multiple provisions of state law.

The judge had previously ruled that the company likely violates Washington law but had not specified when operations must cease or for how long until Thursday’s order. Kalshi has appealed the injunction, and the case is also progressing toward trial. The Washington State Office of the Attorney General noted that the requirement does not include all wagers offered on Kalshi, though it encompasses a substantial portion of their business.

Under Washington law, gambling is recognized as “staking or risking something of value upon the outcome of a contest of chance or a future contingent event”, according to the Attorney General’s office. Every Kalshi bet includes risking money, relying in part on chance, with a promised payout for winners. Kalshi’s website and applications show users a variety of events they can wager money on and the odds for each event, dictating how much the bettor will be paid if the event occurs-similar to the functions of sportsbooks and other gambling operations.

Attorney General Declares Victory for Consumer Protection

“Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more. Under this order, Kalshi is banned from offering wagers on most of those topics in Washington,” Attorney General Nick Brown stated. “As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”

The order aligns with a court-granted preliminary injunction in July, where a judge found that Kalshi was likely violating the law and that “substantial injury to Washington consumers” was likely to occur without an injunction to stop Kalshi’s practices. Kalshi requested that the Washington Court of Appeals stay this injunction, though the court denied the request. The Attorney General’s office noted that Kalshi has been increasingly prioritizing sports wagers in recent years.

Prediction Markets Enter Mainstream Culture

Prediction markets have rapidly become part of the fabric of American culture in recent years. Kalshi has formed partnerships with The Associated Press, CNN, CNBC, and the National Hockey League. The platform offers customers the chance to win or lose money predicting the outcome of almost anything-including sports, elections, international conflict, celebrity weddings, and more.

Users can wager on traffic through the Strait of Hormuz, Iran’s next leader, whether Anthony Fauci will be charged with a crime, and how many posts the president will make on social media. The wide variety of betting options has made the platform increasingly popular among users seeking to monetize their predictions about current events.

Company Claims Federal Regulation Authority

Kalshi has argued that it operates as a prediction market regulated by the federal Commodity Futures Trading Commission, not state laws. The company maintains that the CFTC “has exclusive jurisdiction over our exchange”, positioning its operations as federally regulated futures trading rather than state-level gambling.

This legal defense sets up a potential conflict between federal and state regulatory authority. The outcome of this case could have significant implications for how prediction markets operate nationwide, particularly in states with strict gambling restrictions. The clash between federal commodities regulation and state gambling laws represents a critical test of jurisdictional boundaries in the rapidly evolving world of online prediction markets.

Advertising Ban Adds to Restrictions

Kalshi has also been banned from advertising to Washington consumers as part of the court’s order. This restriction further limits the company’s ability to conduct business in the state, cutting off both operational activities and marketing efforts. The comprehensive nature of the order demonstrates the court’s determination to enforce Washington’s gambling laws against the platform.

The case represents a significant challenge to the prediction market industry, which has grown rapidly in recent years. As Kalshi continues to appeal the decision and move toward trial, the company faces mounting pressure to either modify its business model or exit the Washington market entirely. The geofencing requirements imposed by the court will force Kalshi to implement technical barriers preventing Washington residents from accessing most of its betting options.

The ruling marks a major victory for state regulators seeking to maintain control over gambling activities within their borders, even as federally regulated prediction markets attempt to expand their reach. As the legal battle continues, other states with strict gambling laws may look to Washington’s approach as a model for addressing similar concerns about online prediction markets operating within their jurisdictions.