Washington judge blocks Kalshi contracts, cites state's gambling law

• Judge John McHale ruled there was 'likelihood of actual and substantial injury to Washington consumers from illegal gambling activities' and that public interest outweighed harm to Kalshi
• Washington becomes the latest state to restrict Kalshi after similar court orders in Texas and New York, though a federal appeals court previously blocked New Jersey from regulating Kalshi's sports contracts citing CFTC authority
• Prediction markets like Kalshi and Polymarket have grown significantly since accurately predicting the 2024 presidential election, with $19.04 billion wagered on the recent soccer World Cup through both platforms

Washington Judge Blocks Kalshi Contracts Over Gambling Violations

Key Development:

A Washington state judge on Monday granted a preliminary injunction blocking prediction markets platform Kalshi from offering event contracts in the state, ruling the platform likely violated state gambling laws.

Legal Findings:

King County Superior Court Judge John McHale determined Washington demonstrated "a likelihood of actual and substantial injury to Washington consumers from illegal gambling activities" without the injunction. The judge ruled public interest and consumer protection outweighed potential harm to Kalshi.

Expanding State Actions:

Washington joins multiple states successfully obtaining court orders restricting Kalshi's operations. New York secured a similar order on July 8 when a federal judge rejected Kalshi's attempt to block enforcement of state gambling laws. The company now faces restrictions in at least four states.

Regulatory Conflict:

The U.S. Commodity Futures Trading Commission (CFTC) claims exclusive jurisdiction over prediction markets and has challenged regulatory actions in at least nine states. In April, a federal appeals court cited CFTC authority in blocking New Jersey gaming authorities from regulating Kalshi's sports event contracts, highlighting the ongoing federal-state jurisdictional dispute.

Market Context:

Prediction markets like Kalshi and Polymarket have surged in popularity since the 2024 presidential election, where they more accurately predicted Donald Trump's victory over Kamala Harris than traditional pollsters. According to Dune Analytics, approximately $19.04 billion was wagered through Kalshi and Polymarket on the recent soccer World Cup.

Company Response:

Kalshi disputed the ruling, stating "States don't have jurisdiction to regulate prediction markets" and criticized Washington for "wasting taxpayer dollars."