Washington Court Grants Preliminary Injunction vs Kalshi

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Last Update: Wed Jul 22, 2026, 8:24 am ET

Read Time: 4 minutes

Washington Court Grants Kalshi Preliminary Injunction

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A Washington court has granted a preliminary injunction against Kalshi after a judge found its prediction markets likely violate state gambling laws.

King County Superior Court Judge John McHale ruled that Washington could likely prove Kalshi operates an illegal gambling business. The court also found that consumers could face substantial harm if the platform continued operating during the lawsuit.

The ruling creates another major challenge for Kalshi as states continue disputing its sports event contracts. It also intensifies a wider legal conflict involving state gambling regulators, the company, and the Commodity Futures Trading Commission (CFTC).

Washington Court Ruling Against Kalshi Came After State Lawsuit

Washington Attorney General Nick Brown filed a lawsuit against Kalshi in March. The complaint accused the company of offering and promoting illegal gambling through its prediction market platform.

Kalshi offers contracts based on sports, elections, and other real-world events. Washington argued that these products qualify as gambling under state law.

The state also alleged that Kalshi violated Washington's Consumer Protection Act. Furthermore, officials sought to stop the company from operating and recover money lost by Washington residents.

Judge McHale sided with Washington at the preliminary injunction stage. He found the state was likely to succeed on claims that Kalshi violated the Washington Gambling Act and Consumer Protection Act.

Importantly, the judge also rejected Kalshi's federal preemption argument. Kalshi argued that federal commodities laws prevent Washington from applying its gambling laws to the company's event contracts.

Judge McHale disagreed with that position. He ruled that Washington gambling laws and federal commodities laws address different regulatory fields.

Therefore, the court found that federal commodities regulation did not prevent Washington from enforcing its gambling laws against Kalshi. The holding directly challenges one of the company's central arguments in its broader legal battles with states.

Injunction Sets August 5 Effective Date as Kalshi Must Preserve Records

The judge also determined that public interests and potential consumer harm outweighed the potential harm to Kalshi. As a result, the court granted Washington's request for preliminary relief.

The injunction will not officially take effect until August 5, 2026. The parties must first complete a mandatory meet-and-confer period before submitting the final injunction order.

Meanwhile, Judge McHale has ordered Kalshi to preserve records connected to Washington consumers. The requirement covers user logs, transaction histories, and geolocation data.

The preservation order took effect immediately. It could provide important evidence about Washington users and the company's activities during the legal dispute.

In a press release, AG Brown welcomed the decision as an important first step in the case.

"This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law,".

The decision adds further uncertainty for users and businesses monitoring the future of prediction markets. It also gives Washington regulators another legal foothold against Kalshi's operations.

Why the Washington Ruling Matters for Prediction Market Regulation

The decision arrives as US states increasingly challenge prediction markets over their treatment of sports contracts.

Massachusetts, Michigan, and Nevada have already obtained preliminary injunctions against Kalshi. New York also secured a court victory against the company's effort to block state gambling enforcement.

Those decisions conflict with Kalshi's federal regulatory argument. The company maintains that the Commodity Exchange Act gives the CFTC exclusive authority over prediction markets.

The CFTC has similarly argued that states cannot regulate CFTC-registered event contracts. The federal agency has also challenged state efforts to apply gambling laws against Kalshi.

Kalshi spokesperson Jacki McGavick criticized Washington's latest action.

"Many courts – including the Third Circuit – have made this clear. We're disappointed to see Washington State continue wasting taxpayer dollars."

The Third Circuit previously backed Kalshi's federal preemption argument in a New Jersey dispute. Yet Washington's ruling shows that courts remain divided over the legal status of prediction markets.

The disagreement could significantly influence the future of US online sportsbooks and emerging prediction market platforms. These businesses increasingly compete for consumers interested in sports-related event contracts.

For Washington gambling regulators, the case represents an effort to preserve state oversight. For Kalshi and the CFTC, it represents a challenge to federal authority over derivatives markets.

As a result, the Washington case could become another important test in the broader battle. That conflict will determine whether states or federal regulators control prediction markets across the United States.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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