Kalshi is facing a new legal challenge after Washington state sued the operators of the prediction market over its event-based contracts.
Summary
- Washington sued Kalshi, alleging that its contracts violated state gambling and consumer protection laws.
- Kalshi appealed the Washington case to federal court and said the state did not provide a warning.
- Nevada and Arizona also challenged Kalshi as pressure on the forecast market grew in several states.
The case adds to a growing list of federal actions against the company as regulators question whether its products amount to illegal gambling.
Washington Attorney General Nick Brown filed the complaint on Friday, saying Kalshi violated state gambling laws through the website and app. The state said the platform gave consumers a way to put money on future events and receive payments based on results.
The complaint alleged that Kalshi violated the Washington Consumer Protection Act, the Gambling Act, and the Gambling Recovery Act. State officials pointed to Washington’s ban on Internet gambling and its strict regulation of the gaming market as the basis of the case.
Brown’s office said Kalshi’s platform works like a sports book. In its statement, the office said,
“Kalshi’s website and app show consumers a range of events they can bet on and the odds of those various events, indicating how much the bettor will be paid if the event takes place.”
Washington said the company’s products fall under the state’s definition of gambling. Under state law, gambling involves risking something of value on the outcome of a contest of chance or a contingent future event.
The attorney general’s office said each of Kalshi’s contracts involved money, opportunity, and a payout to the winners. It also argued that calling the service a prediction market did not change how the products operate under state law. The complaint said Kalshi allows users to “bet on anything” while avoiding the gambling label.
Kalshi quickly appealed to the federal court. In its filing, the company said the issues raised in Washington were already being litigated in other federal courts and that there had been no “warning or dialogue” from the government before the lawsuit.
Legal pressure is mounting in several US states
The Washington case follows other recent legal setbacks for Kalshi. Earlier this month, a Nevada judge temporarily barred the company from operating in the state after finding that regulators were likely to win their case.
Arizona has also moved against the company in recent days. Attorney General Kris Mayes announced the charges, saying Kalshi operated an illegal gambling business in the state without a license and offered illegal election bets.
Kalshi argued that the US Commodity Futures Trading Commission has exclusive jurisdiction over its futures contracts. Still, state regulators and lawmakers continue to challenge the platform as scrutiny of speculative markets grows across the United States.
