Tech and AI
Washington court orders Kalshi to block state bettors from sports and election wagers
By Staff Writer | 17 August 2026
A King County Superior Court judge has ordered the prediction market operator to stop offering wagers on sports, elections, politics, entertainment, culture, tech and science, and so-called mentions to users in Washington. Geofencing must be in place in stages by 2 September, with $120,000 a day available in penalties if it is not.
Judge John F. McHale signed the amended and updated preliminary injunction order on 12 August in State of Washington v KalshiEX, LLC, case 26-2-10264-3 SEA, and the state Attorney General's office announced it the following day. The order requires the platform to stop offering, taking or enabling wagers in the named categories for Washington users, and to prove it can keep them out: an IP address and residency based geofence must be running by 19 August, and a multi-source geofencing solution provided through GeoComply by 2 September.
If the geofencing is not implemented by that date, the order gives the operator a choice: pay the state $120,000 for each day until it is complete, or appear and show cause why implementation remains outstanding. Users are not locked in; the order states that the company will not prohibit users from exiting positions they already hold, and the state has reserved the right to seek recovery of fees and losses incurred by Washington consumers after 2 September.
Not licensed, and likely to mislead
The court found that the operator, a wholly owned subsidiary of Kalshi, Inc., is not licensed by the Washington State Gambling Commission to conduct online gambling and is not registered to conduct business in the state. Its platform lets consumers bet on thousands of topics, including whether public figures will utter specific words or phrases, the category the order calls mentions. McHale found the state likely to succeed in proving breaches of both the Washington Gambling Act and the Consumer Protection Act, writing that "Kalshi's advertisements that it offers 'legal betting' in Washington state are likely to mislead a reasonable consumer that such gambling activities are legal under state law."
As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.
Nick Brown, Attorney General of Washington
The order is part of a preliminary injunction first granted in July 2026. The company asked the Washington Court of Appeals to stay that injunction; the request was denied.
The federal pre-emption argument was rejected here
The company's defence across the country has been that state gambling law simply does not reach it, because the US Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive jurisdiction over transactions on designated contract markets. McHale rejected that reading, concluding in terms that "The Commodity Exchange Act (CEA) does not preempt Washington State gambling law", and noting that the statute contains no express pre-emption language and preserves the jurisdiction of state courts and regulators. In a statement, the company said it is regulated by the CFTC, which it maintains has exclusive jurisdiction over its exchange, that it respectfully disagrees with the decision and that it is considering all legal options.
The federal regulator itself is fighting on the company's side of the line. On 11 August the CFTC exercised its emergency authority and ordered the exchange to keep operating after the company notified it of a market emergency arising from New York's lawsuit, filed on 31 July, which seeks a restraining order covering event contracts nationwide and more than $36 billion in damages. "Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws," CFTC Chairman Michael S. Selig said. The agency has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin to defend its claimed jurisdiction.
The Washington order stands whatever the federal agency says, unless and until a higher court disturbs it. The larger question, whether an event contract is a federally regulated derivative or a state-regulated bet, is now being answered one courtroom at a time, and the answers so far do not agree with each other. Operators, and anyone building products on top of prediction markets, should assume the state-by-state map keeps changing for some time yet.