A Washington judge has imposed new limits on Kalshi, giving the prediction market operator firm deadlines to stop people in the state from buying contracts linked to sports, elections, politics and other topics.
King County Superior Court Judge John McHale signed the amended preliminary injunction on August 12. He had previously concluded that Washington was likely to prove Kalshi was violating state gambling and consumer protection laws.
“This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” Attorney General Nick Brown said after the court initially granted the preliminary injunction in July.
“Kalshi padded their pockets as they promoted illegal betting on sports, elections, the total number of measles cases this year, what will witnesses say during a child trafficking hearing, and even natural disasters.”
He added in his most recent statement: “As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”
On Kalshi, customers purchase “yes” or “no” contracts predicting how future events will turn out. Winning contracts pay out, losing customers forfeit their wagers, and Kalshi earns transaction fees.
Washington argues those transactions amount to gambling, despite Kalshi describing itself as a prediction market. The dispute follows a December 2025 Washington State Gambling Commission warning that event-based contracts were unauthorized in the state. The commission said legal sports wagering remained available at tribal casinos.
Washington users face tighter limits on Kalshi contracts
McHale’s latest order requires Kalshi to introduce IP-address and residency geofencing by August 19. A multi-source GeoComply system must follow by September 2, blocking people physically inside Washington from purchasing contracts covered by the injunction. Existing positions can still be closed.
Missing the September 2 deadline could cost Kalshi $120,000 for every additional day unless it submits a sworn affidavit explaining the delay. The court can impose penalties if Kalshi fails to show sufficient diligence.
Restricted categories include sports, elections, politics, entertainment, culture, technology, science and “mentions” contracts based on whether certain words or phrases are spoken. Commodities, climate, economics and finance contracts remain outside that restriction. Kalshi must also stop targeting Washington residents with advertising for prohibited products.
The jurisdiction fight has moved between courts. Kalshi removed Washington’s March lawsuit to federal court, describing itself as a federally regulated derivatives exchange overseen by the Commodity Futures Trading Commission. After the case was remanded, Kalshi sought a federal pause in May while pursuing an appeal.
McHale rejected Kalshi’s federal preemption argument. “Regulation of gambling and regulation of futures markets are different fields of regulation,” the order says. It also concludes that “The Commodity Exchange Act (CEA) does not preempt Washington State gambling law.”
Advertising also drew scrutiny. “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,” McHale 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,” McHale wrote.
Kalshi must preserve Washington customer records, including account activity, communications, location findings and marketing information. Washington users can still close accounts and withdraw their money.
Featured image: Kalshi / Canva
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