Washington Judge Finds Kalshi Likely an Illegal Gambling Site

Prediction-market operator Kalshi is set to lose access to Washington after a state judge found it is likely running an unlicensed online gambling business — and rejected the federal-preemption defense the company has used to fend off state regulators across the country.

King County Superior Court Judge John McHale granted Washington a preliminary injunction against Kalshi on July 20, 2026, ruling the state is likely to prove the platform violates its Gambling Act and Consumer Protection Act by operating an illegal betting site. Attorney General Nick Brown, whose office won the order, announced it the following day.

The finding is preliminary, not a final judgment. To secure the injunction, Washington had to show both that it will likely win the case and that consumers face substantial harm without court intervention, and McHale concluded it cleared both bars. He has not yet set out exactly how Kalshi must wall off Washington users, but one directive took effect immediately: the company must preserve all records tied to Washington bettors, including its geolocation and marketing data.

A federal shield that keeps failing

Kalshi’s argument in Washington was the same one it runs everywhere. As an exchange overseen by the Commodity Futures Trading Commission, it contends its “event contracts” fall under the Commodity Exchange Act, the federal law governing derivatives markets, and that federal oversight blocks states from treating those contracts as gambling. McHale rejected that reading, finding Kalshi can follow federal market rules and Washington’s gambling law at the same time.

The judge turned the federal statute against the company. He pointed to language stating that nothing in it strips state regulators or state courts of their authority, and to a provision letting the CFTC screen event contracts tied to gaming or to conduct that is unlawful under state or federal law — a sign, he wrote, that Congress meant to leave the definition of illegal gambling to the states. Gambling regulation and futures-market regulation, he concluded, are separate fields that Congress never merged.

That reasoning tracks a federal judge’s refusal to shield Kalshi from New York’s gambling laws earlier in July, and it splits from the one appellate win Kalshi keeps citing — a Third Circuit decision that its sports contracts qualify as federally regulated swaps beyond state reach. That divide between a federal appeals court and a lengthening line of state rulings is the sort of conflict that tends to reach the Supreme Court.

Washington’s hard line on online betting

Washington enforces some of the strictest gambling rules in the country. It effectively outlawed internet gambling in 2006, and the only legal sports betting in the state runs through in-person books at tribal casinos. The Washington State Gambling Commission told Kalshi in December 2025 that its event contracts were not authorized, and McHale noted the company kept operating regardless. State lawyers also pointed to a Kalshi advertisement in which one user boasts about finding a way to bet on the NFL despite living in Washington, which they argued showed the company knew it was skirting the law.

“This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” Brown said, accusing the platform of promoting bets on everything from elections to measles-case tallies to natural disasters. His lawsuit, filed in March 2026, asks not only for a permanent shutdown but for restitution to Washingtonians who lost money and civil penalties for each violation.

Kalshi disputes the state’s authority outright. A company spokesperson told KUOW that “states don’t have jurisdiction to regulate prediction markets,” pointing to court rulings, including the Third Circuit’s, that back federal control, and dismissed the case as a waste of taxpayer money. Launched in 2021 and now the largest prediction market by volume, Kalshi drew roughly $33 billion in trading in June 2026 alone, and by its own accounting sports betting made up the bulk of its revenue last year.

What comes next

The injunction will not bite right away. McHale gave both sides until early August to propose the order’s exact terms and said he would enter the full injunction around August 5, 2026. With it, Washington becomes the fourth state to win a court order restricting Kalshi, after Massachusetts, Michigan and Nevada, while New York secured comparable relief in federal court. Gaming attorney Daniel Wallach counts 19 state wins across 23 court decisions on whether to freeze prediction-market operators.

Those state victories are colliding with federal pushback. The CFTC, which claims exclusive authority over event contracts, has sued several states and recently told Kalshi to defy a Michigan court order to unwind trades there. Other states are moving fast on the Washington decision: Minnesota’s attorney general filed it as supporting authority in his own pending case within hours of its release. The pressure is rising in Congress too, where a bipartisan bill would force sports betting off prediction markets and a bloc of senators has urged regulators to ban contracts that mimic sports wagers. For now, Kalshi faces the same bind in Washington that it does elsewhere: obey a state that calls its product illegal gambling, or a federal regulator that says the state has no say.