Washington Court Grants Preliminary Injunction Against Kalshi, Rejects Federal Preemption Arguments

A Washington state judge has granted a preliminary injunction against Kalshi. The court found that the state is likely to succeed on multiple claims alleging that the prediction market operator’s sports-event contracts violate Washington gambling laws and that the Commodity Exchange Act (CEA) does not preempt them.

Excerpts from the order, first shared by gambling attorney Daniel Wallach on X, show the court repeatedly characterized Kalshi’s offerings as illegal gambling. The judge concluded:

Kalshi transacts business in King County by offering, operating, conducting, marketing, promoting, and/or distributing unlicensed and illegal gambling activities, including, without limitation, illegal gambling games, bookmaking, and professional gambling with respect to betting on sports, elections, politics, entertainment, culture, and mentions markets (collectively, Illegal Gambling Activities).”

The order further states:

Kalshi knowingly accepts and receives money from Washington consumers through its online betting platform. By facilitating wagers and collecting fees, Kalshi profits from its betting platform.”

According to Wallach, courts have now issued 23 decisions on requests for preliminary injunctions or temporary restraining orders in prediction market cases, with states prevailing in 19 of them.

Court Finds Washington Likely to Prevail

The court found Washington is likely to succeed on claims under several state gambling statutes:

The State has shown a likelihood of success on the merits of its claims that Kalshi’s conduct violates the RMLGA, RCW 4.24.070.”

The judge also found Washington had shown a likelihood that Kalshi violated multiple provisions of the Washington Gambling Act. Those include findings that the company “operates, develops, manages, finances, and/or profits from Illegal Gambling Activities in Washington.”

The order further states that Kalshi:

Engaged and continues to engage in professional gambling, including by engaging in bookmaking.”

The court also concluded that Kalshi’s advertising may violate Washington’s Consumer Protection Act, stating:

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.”

Judge Rejects Federal Preemption Arguments

The court also rejected Kalshi’s core argument that the CEA preempts state gambling laws and prevents states from enforcing them against federally regulated prediction markets.

According to the order:

The Commodity Exchange Act (CEA) does not preempt Washington State gambling law.”

The order further states that the state’s regulation is intended to enforce gambling laws. It says that complying with Washington law would not prevent Kalshi from complying with federal laws.

The court also found that allowing Washington to continue enforcing its gambling laws “does not subvert the purpose of the CEA to uniformly regulate actual futures trading.”

The judge further wrote: “Regulation of gambling and regulation of futures markets are different fields of regulation.”

The order also states that Congress did not intend for federal commodities law to displace state gambling regulation. The judge wrote:

The language referenced above indicates that Congress did not intend to supersede or limit States in regulating gambling or in superseding or limiting the jurisdiction of any court of any State in addressing such regulation.”

The judge also noted CFTC’s Rule 40.11, which prohibits contracts involving “gaming” or activities unlawful under state or federal law.

Public Interest Favored an Injunction

The court found that Washington had established irreparable harm if Kalshi continued to operate while the litigation proceeds.

The court acknowledged Kalshi’s evidence regarding compliance costs and lost profits, a common argument across multiple cases. However, the judge concluded that the public interest outweighed those concerns.

The judge wrote:

The public interests at stake and potential harm to consumers in the continued operation of Kalshi’s online gambling activities in the State of Washington outweigh harm to Kalshi.”

Fourth State To Get a Preliminary Injunction Against Kalshi

Washington becomes the fourth state to obtain a preliminary injunction against Kalshi after Massachusetts, Nevada and Michigan.

At the beginning of the year, Massachusetts secured an injunction against Kalshi’s sports event contracts. However, the operator later obtained a stay pending its appeal.

Nevada successfully obtained an injunction, and Kalshi was ordered to stop offering contracts for sports, entertainment, and election events. Last month, the Nevada Gaming Control Board asked a state court to hold Kalshi in contempt, arguing that the operator has failed to comply with the order.

Michigan was the latest to obtain a preliminary injunction against Kalshi.

Earlier this month, a state court extended a previously issued temporary restraining order requiring Kalshi to stop offering sports-event contracts in the state. The court gave the operator until Aug. 12 to implement geofencing technology or face a $500,000-per-day fine.

In Washington, the court reserved the injunction’s specific terms for a later order. The judge directed the parties to meet and confer on the scope and language of the injunction, with proposed terms due Aug. 3.

The court said it intends to enter a final order setting out the specific requirements of the injunction by Aug. 5.