A Washington judge has stated that Kalshi has very likely violated local gambling laws and consumer protection requirements. This comes amid a continued lawsuit between the state’s AG and the event contracts operator.
Preliminary Injunction Was Granted, Final Injunction Looms
In a ruling issued a few days ago, King County Superior Court Judge John McHale stated that Kalshi has likely violated state laws on gambling and player protection. He also determined that its users in Washington face potential harm if the platform continues to offer prediction markets while the case unfolds.
The ruling granted a preliminary injunction against Kalshi, meaning that there is a high likelihood the state would be successful in proving that the operator’s activities are considered illegal gambling in the Evergreen State. A final injunction order is expected to be issued on August 5.
For reference, the ruling is tied to a lawsuit by the Office of the Attorney General against Kalshi. If a definitive injunction is secured, Kalshi would be officially prohibited from violating the local law.
Washington AG Nick Brown commented on the development, calling it “the first step toward holding Kalshi accountable for their brazen violations of Washington law.”
Washington Is Not a Gambling-Friendly State
For reference, Washington law uses a broad definition of gambling, which states that gambling is any activity in which a player stakes or risks something of value upon the outcome of a contest of chance or a future contingent event. Even though Kalshi has previously insisted that event contracts are different from traditional gambling, its products could potentially be interpreted as gambling per the Washington definition.
For reference, Kalshi and other prediction market operators have previously tried to argue that their products are not gambling since players do not wager on an event, but buy yes-no shares in certain outcomes. Additionally, Kalshi boasts a decentralized model where players stake against one another instead of against a house.
Kalshi ads, however, have explicitly stated that consumers can “bet on anything,” even in states where traditional sports betting is not allowed, which has attracted the ire of many regulators and lawmakers. In Washington, one ad saw a person text another that they “found a way to bet on the NFL even though we live in Washington,” which seemingly cements the somewhat hazy position of prediction markets.
Washington, in particular, has prohibited gambling on state lands ever since 1889. Then, in 1973, the law was amended to prohibit online gambling as well. Despite that, the state boasts several casinos on tribal lands.