Kalshi’s Expansion Stalls as Washington Court Orders Sports Market Crackdown

Washington’s ruling adds to growing state pressure on Kalshi as courts weigh gambling laws against federal oversight.

State regulators are stepping up efforts to rein in sports prediction markets. Washington has joined a growing number of states challenging Kalshi, arguing its event contracts violate local gambling laws. While the latest court order has not taken effect, it adds fresh pressure to an industry facing conflicting state and federal positions.

Washington Judge Sides With State in Kalshi Sports Betting Dispute

King County Superior Court Judge John McHale granted Washington’s request for a preliminary injunction on July 20. The judge ruled that the state is likely to prevail on claims that Kalshi’s sports-event contracts violate state gambling regulations. Gambling attorney Daniel Wallach first shared excerpts of the court order on X. 

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

Enforcement has been delayed until at least Aug. 5, giving both sides until Aug. 3 to file additional arguments before the restriction takes effect. According to court filings first shared by gambling attorney Daniel Wallach, Judge McHale ruled Kalshi’s sports contracts to be unlawful gambling under Washington law. His decision also found that the Commodity Exchange Act does not stop the state from applying its own gambling statutes while the case proceeds.

Kalshi maintains that its products fall under federal authority because it operates as a Commodity Futures Trading Commission-regulated exchange. Washington argues that federal oversight does not give the company permission to offer sports-based contracts without complying with state gambling rules.

Kalshi Faces Mounting Legal Challenges Across the U.S.

Washington’s case is part of a wider campaign by state regulators against prediction markets. State officials originally sued Kalshi in March, alleging that the company operated unlicensed online betting markets tied to sports, elections, and other real-world events. Their position is that calling wagers “event contracts” does not change their legal status under state law.

State officials filed the lawsuit in March, accusing Kalshi of offering unlicensed online wagering products tied to sports, elections, and other real-world events. Along with an injunction, Washington is seeking restitution for consumers and civil penalties.

Similar legal battles are already underway elsewhere. Michigan temporarily blocked Kalshi’s sports contracts in June, while New York also won an early court victory after a federal judge allowed the state to enforce its gambling laws. 

Minnesota has since cited Washington’s ruling in its own pending lawsuits involving Kalshi, Polymarket, and the CFTC. Gambling attorney Daniel Wallach said states have now prevailed in 19 of 23 requests for preliminary injunctions or temporary restraining orders involving prediction market operators.

Meanwhile, the CFTC continues to defend its authority over event contracts traded on federally registered exchanges. The agency has filed lawsuits against several states seeking to stop local gambling rules from reaching federally regulated prediction markets.