Court Rules Kalshi is Violating Washington Gambling Law

Kalshi just suffered another critical loss, this time in Washington’s sports betting market.

A King County Circuit Court is preparing to grant the state of Washington’s request for a temporary injunction against Kalshi. It found that Kalshi is likely breaking the state’s gambling laws by offering sports prediction markets, which it determined to be an illegal form of sports betting.

While the ruling was announced today, the final order won’t be issued until August 5. At that time, Kalshi will need to halt all sports markets in the state as its legal battle with Washington plays out. However, the operator could appeal the decision to try to prevent the final order from taking effect.

The ruling comes as Kalshi and other prediction markets reported impressive volume from the 2026 World Cup. The prediction industry is estimated to have captured almost 30% of all wagers on the tournament, which the US co-hosted.

“This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,” Washington Attorney General Nick Brown told reporters. “Kalshi padded their pockets as they promoted illegal betting on sports, elections, the total number of measles cases this year, what will witnesses say during a child trafficking hearing, and even natural disasters.”

Kalshi lost another fight over an injunction earlier this month in Michigan, which it has appealed.

Courts Turn Against Prediction Markets

There is a chance that Kalshi will appeal the ruling in Washington and avoid having to shut down or restrict operations. However, the momentum appears to be turning against the prediction industry.

As lawsuits continue to mount, the industry has stuck to its defense that the markets count as “swaps,” which are protected under the Commodity Exchange Act. This was effective early on, but courts seem to be growing weary of the argument.

In a recent Michigan ruling, a judge agreed to assume transactions on sports markets are a form of swaps. However, the ruling stated that the CEA doesn’t overrule state gambling and consumer protection laws. The Washington ruling mirrors that logic, setting a precedent that could affect the many other lawsuits over the industry.