Kalshi is confronting a fresh legal challenge after the state of Washington filed a lawsuit on Friday alleging the prediction market platform broke multiple state laws. The complaint, brought by Washington Attorney General Nick Brown, accuses Kalshi of violating the Washington Consumer Protection Act, the Gambling Act, and the Recovery of Money Lost at Gambling Act. The state points to its existing ban on online gambling and its strict oversight of the gaming industry as the basis for the claims.
Brown’s office argues that Kalshi’s platform functions identically to a sportsbook, presenting users with a list of events to wager on alongside odds that determine potential payouts. Under Washington law, gambling is defined as staking something of value on the outcome of a chance-based or future contingent event. The attorney general contends that every transaction on Kalshi involves risking money, relies partly on chance, and promises a payout to those who win, placing the company squarely within that legal definition.
Kalshi pushed back quickly, filing to move the case to federal court. The company argued that the legal questions raised by Washington’s suit are already being addressed in other federal proceedings and noted that state authorities had provided no prior warning or attempted any dialogue before filing the complaint. The company has consistently maintained that its contracts fall under the exclusive jurisdiction of the US Commodity Futures Trading Commission, a federal agency that has supported prediction markets in similar disputes.
The Washington lawsuit is the latest in a series of state-level legal actions targeting Kalshi. Earlier this month, a Nevada judge issued a temporary restraining order blocking the company from operating in that state for 14 days. Carson City District Court Judge Jason Woodbury sided with a motion from the Nevada Gaming Control Board, finding that state authorities are reasonably likely to succeed in arguing that Kalshi’s event contracts violate Nevada gambling laws.
Days before the Washington filing, Arizona Attorney General Kris Mayes announced criminal charges against the companies behind Kalshi, alleging the platform ran an illegal gambling business in Arizona without a license and offered unlawful election wagering. Arizona stands out among the states pursuing Kalshi as one of the first to pursue criminal rather than civil action, though several other states have also filed cases alleging the platform offered sports gambling to residents without proper licensing.
The mounting legal pressure on Kalshi arrives as prediction markets more broadly face scrutiny from federal lawmakers. Legislators have raised concerns about platforms offering wagers on US military actions, citing the potential for insider information within government circles to influence outcomes. The combination of state enforcement actions and congressional attention signals a widening debate over how prediction markets should be regulated across the country.
Originally reported by CoinTelegraph.
