A Washington state judge has granted a preliminary injunction that will block Kalshi from offering sports-related prediction markets to residents. The ruling, issued on July 20, found the platform violated state gambling laws locally, despite its federal CFTC registration.
What Happened
King County Superior Court Judge John McHale granted Washington’s request for a preliminary injunction on July 20, determining that the state was likely to succeed in its legal challenge against Kalshi, according to Crypto News. This ruling prevents Kalshi from offering sports-related prediction markets to residents of Washington state. The injunction, however, will not become effective before August 5, as the court plans to review additional submissions from both parties by August 3.
The state of Washington initiated legal action against Kalshi in March, alleging that the company was offering and advertising unlicensed online betting products that cover sports, elections, and other real-world events. Judge McHale ruled that the Commodity Exchange Act (CEA) does not preclude Washington from applying its gambling laws to Kalshi’s operations. The court concluded that consumer protection concerns justified the temporary restrictions, with McHale stating that Kalshi “offers illegal gambling activities to Washington consumers,” per Crypto News.
Key Details
- A Washington state judge granted an injunction against Kalshi on July 20, blocking its sports prediction markets in the state (Crypto News).
- The ruling stems from a dispute over whether sports event contracts fall under federal commodities law or are subject to state gambling regulations (Crypto News).
- Kalshi, a CFTC-regulated exchange, argues its contracts are under federal jurisdiction, while Washington views its sports products as illegal gambling without state authorization (Crypto News).
Why It Matters
This ruling is part of a broader, rapidly expanding legal conflict nationwide concerning the jurisdictional authority over prediction markets. The central issue is whether sports event contracts are exclusively governed by federal commodities law or if state gambling regulations can also apply. Kalshi contends that its CFTC registration places its contracts under federal jurisdiction, a position that the Washington judge rejected, aligning with growing state-level challenges, reported Crypto News.
The Washington decision follows similar legal actions and rulings in other states. In June, a Michigan judge issued a temporary cessation order against Kalshi for offering sports event contracts without state licenses. New York has also previously won an early court round, with a federal judge rejecting Kalshi’s bid to prevent the state from enforcing its gambling laws on sports-related event contracts. Minnesota has cited the Washington ruling as supplemental authority in its ongoing cases against Kalshi, Polymarket, and the CFTC, according to attorney Daniel Wallach. Wallach also noted that states have prevailed in 19 out of 23 court decisions involving requests for preliminary injunctions or temporary restraining orders in prediction market cases.
What’s Next
The Washington court has delayed the enforcement of the preliminary injunction until at least August 5, to allow time for both parties to submit additional material. The case will then proceed, with Kalshi expected to continue arguing that federal derivatives law protects its products from state gambling regulation. The broader question of federal versus state authority over prediction markets remains before several courts across the United States, indicating continued legal challenges for platforms like Kalshi, according to Crypto News.
Originally reported by Crypto NewsPublished
Sources & References
Primary source
- Crypto Newscrypto.news