Key highlights:
- Prediction market platform Kalshi faces preliminary injunction in Washington
- The judge rules that the platform offers illegal gambling services in the state
- The news highlights the growing battle between the US states and prediction markets
Prediction markets continue to face increased scrutiny from US state authorities. In the latest legal setback, prediction market platform Kalshi has been hit with a preliminary injunction in Washington. The court temporarily blocked Kalshi’s sports event contracts.
Prediction market platform Kalshi faces fresh legal challenge in Washington
Kalshi, a prominent prediction market platform, has suffered another legal challenge as a Washington state court issued a preliminary injunction against its sports-related event contracts. King County Superior Court Judge John McHale recently ruled that the state may win the legal battle against Kalshi by proving that the platform violates Washington’s gambling and consumer protection rules.
BREAKING: Washington state court issues preliminary injunction against Kalshi, finds that the company conducts illegal gambling activities in violation of Washington State gambling laws and that the Commodity Exchange Act does not preempt state gambling laws. pic.twitter.com/pwJeDmYbD5
— Daniel Wallach (@WALLACHLEGAL) July 21, 2026
It is worth noting that the latest development comes as part of the ongoing lawsuit between Kalshi and Washington state authorities. While the state argues that prediction markets should comply with gambling laws, Kalshi asserts that it is a federally regulated exchange under the Commodity Futures Trading Commission (CFTC). Thus, Kalshi’s argument is that prediction markets are exempt from state gambling laws.
However, the Washington court judge rejected Kalshi’s arguments, stating that the Commodity Exchange Act does not override the state’s regulatory authority over prediction markets. This means that Kalshi must comply with both state and federal laws. While Kalshi argues that “States don’t have jurisdiction to regulate prediction markets,” the judge dismissed it by saying that the platform offers “illegal gambling activities to Washington consumers.”
Although the court has approved the injunction, it has not yet finalized how the restrictions will be implemented. The court has asked the prediction market platform to preserve the records related to Washington users. As the next step, both Kalshi and the state representatives are supposed to submit their proposals by August 3. The court’s final order on these restrictions will be issued by August 5.
State scrutiny over prediction markets continues
It is important to note that the latest development in the Kalshi lawsuit comes amid growing scrutiny over prediction markets from state authorities. Platforms like Kalshi and Polymarket continue to face increased challenges in the US states. Several states have already filed lawsuits against these platforms over the past few months.
Significantly, this legal battle is mainly focused on the state’s regulatory authority over prediction market platforms. While the US states claim that these platforms should comply with gambling laws, they contend that the CFTC is responsible for their regulation.
Washington is not the only US state suing Kalshi. Other states like Michigan, New York, and Minnesota have also filed cases against the firm, claiming that it violates state gambling laws. In most of these cases, the courts are siding with the state authorities. Meanwhile, Polymarket is facing increasing challenges internationally.
While many states have already sued these platforms, the CFTC has largely backed Kalshi and Polymarket. In an effort to support their claims, the regulator has initiated legal battles against US states, including Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island, Wisconsin, and Kentucky.
Source:: Prediction Market Scrutiny Intensifies as Washington Court Blocks Kalshi's Sports Contracts