Prediction market platform Kalshi is facing another legal challenge after Washington state filed a lawsuit alleging violations of gambling laws. The complaint, filed by Attorney General Nick Brown, argues that the company’s products function similarly to traditional sportsbooks and therefore fall under state gambling restrictions.
Washington Authorities Cite Consumer and Gambling Law Violations
State officials claim Kalshi violated the Washington Consumer Protection Act, Gambling Act, and Recovery of Money Lost at Gambling Act. The lawsuit points to the state’s strict ban on online gambling, stating that Kalshi allows users to stake money on future events with potential payouts, which meets the legal definition of gambling under state law.
Kalshi responded by seeking to move the case to federal court, arguing that prediction market contracts fall under the jurisdiction of the Commodity Futures Trading Commission and noting that the state provided no prior warning before filing the lawsuit.
Multiple States Increase Legal Scrutiny on Prediction Markets
The Washington case follows similar actions across the country. A Nevada judge recently issued a temporary restraining order blocking Kalshi operations, while Arizona authorities filed charges alleging the platform ran an unlicensed gambling business. These cases reflect growing nationwide scrutiny as regulators question whether prediction markets operate within existing gambling laws.
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