Washington Attorney General Nick Brown filed a civil lawsuit against prediction market platform KalshiEx LLC this week, alleging the company runs an illegal online gambling operation in violation of state law.
Is Kalshi Legal in Washington State? AG Says No, Files Suit
The complaint, filed in King County Superior Court, targets Kalshi‘s binary event contracts, wagers priced between one cent and 99 cents that pay out $1 to winners and nothing to losers. Washington argues those contracts meet the state’s statutory definition of gambling under RCW 9.46.0237: “ staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person’s control.”
Brown’s office is seeking a permanent injunction, full restitution for Washington residents’ losses, disgorgement of Kalshi’s profits, and civil penalties for each violation. Investigators also want a full accounting of every Washington user’s transactions.
The AG’s office did not limit its targets to sports betting. The complaint accuses Kalshi of offering markets on elections, Supreme Court cases, entertainment outcomes, public health data, and international conflicts. “For Kalshi, every event, every tragedy is nothing more than a potential way for Americans to risk their fortunes,” Brown said in a statement accompanying the filing.
Kalshi, founded in 2018 and publicly launched around 2021, operates as a CFTC-designated contract market for event contracts — a category of commodity derivatives. The company expanded aggressively into sports betting in 2025 and has marketed its platform as “legal betting in all 50 states.”
The company moved the case to federal court immediately after the filing, citing exclusive federal jurisdiction. A Kalshi spokesperson said Brown’s office had a scheduled meeting with Kalshi before filing suit and that going forward with the complaint was premature. Kalshi also disputed specific market claims in the complaint, saying it does not offer war markets as alleged.
Washington has among the strictest gambling statutes in the country. Its 1889 state constitution prohibited gambling on state lands. The 1973 Gambling Act tightly limited most forms of wagering, and the 2006 legislation explicitly banned online gambling. State officials insist Kalshi operates outside all three frameworks.
Washington is not acting alone. At least 11 states have issued cease-and-desist orders against prediction market platforms. Arizona filed criminal charges against Kalshi in March 2026. Nevada obtained a temporary restraining order barring Kalshi from offering sports, politics, and entertainment markets, and a separate 60-day preliminary injunction covering Coinbase’s Kalshi-powered products. An Ohio federal judge ruled Kalshi must follow state gambling laws for sports betting.
Kalshi has also notched federal wins. Courts in New Jersey and Tennessee ruled in its favor. A case in Michigan involves rival platform Polymarket, which filed preemptively. Utah, where Kalshi sued to block a proposed ban, remains active.
The legal conflict centers on a direct clash between state police powers and federal commodities law. The CFTC has issued guidance on manipulation and is weighing additional rules. Trump administration CFTC Chair Brian Selig and prior agency amicus briefs have sided with federal preemption.
Legal experts tracking the cases say the disagreement could reach the U.S. Supreme Court. States argue prediction market platforms are sportsbooks operating without state licenses, targeting young adults through leaderboards, push notifications, and influencer promotions. Kalshi disputes that framing, saying its exchange is structurally different from state-regulated sportsbooks and casinos.
Washington residents using Kalshi may lose access to the platform while litigation proceeds. The state’s restitution claim draws on the Recovery of Money Lost at Gambling Act, which allows consumers to reclaim gambling losses.
The case is in its earliest stages. The federal transfer ruling will determine which court hears the matter first.
FAQ 🔎
- What is Kalshi being sued for in Washington? Washington AG Nick Brown alleges Kalshi operates an illegal online gambling service in violation of the state’s Gambling Act and Consumer Protection Act.
- Is Kalshi legal in Washington State? Washington says no — the state is seeking a permanent injunction to block Kalshi from operating within its borders.
- How does Kalshi respond to the Washington lawsuit? Kalshi moved the case to federal court, arguing it operates under exclusive CFTC jurisdiction that preempts state gambling laws.
- What states have taken action against Kalshi? Washington, Arizona, Nevada, Ohio, and at least 11 other states have filed lawsuits, criminal charges, or cease-and-desist orders against Kalshi or rival prediction markets.
