Washington State Sues Kalshi, Alleging Violations of Gambling Laws

Washington state on Friday filed suit against prediction markets operator Kalshi, alleging the company's products violate state gambling laws. The complaint says Washington maintains a tightly regulated gambling market, including a ban on online gambling, and argues Kalshi's offerings effectively sidestep those rules. In a state press release, officials said Kalshi's website and app present users with events to wager on and odds that determine payouts if the event occurs, describing the model as functionally similar to sportsbooks. The state also pointed to Kalshi marketing that it lets consumers 'bet on anything,' characterizing the company's 'prediction market' framing as a rebranding of gambling. Washington's filing cites Kalshi advertisements referencing "legal betting" and alleges the activity fits state definitions of "gambling," "professional gambling," "bookmaking" and other provisions. The suit also alleges Kalshi's products promote gambling addiction and specifically target college students. Kalshi has moved to shift the case to federal court, saying it is already litigating similar issues in other federal venues and that Washington provided "no warning or dialogue" before filing. The case adds to a widening clash between states and prediction market providers. Industry proponents, including Commodity Futures Trading Commission Chair Mike Selig, argue these platforms offer derivatives contracts overseen at the federal level. States counter that the products amount to gambling marketed under a different label and should fall under state gambling statutes. Legal experts have told CoinDesk the dispute may ultimately reach the U.S. Supreme Court. Washington's lawsuit follows recent court action in Nevada. A week earlier, Nevada won an appeals court ruling allowing it to seek a temporary restraining order against Kalshi, requiring the company to remove its sports, entertainment and election contracts from the state for at least two weeks. A hearing is scheduled for Friday, April 3, when a state judge will decide whether to extend the restriction. Gambling Insider reported Friday that Kalshi users in Nevada were still able to access the platform after the temporary restraining order took effect. Nevada also obtained a preliminary injunction against Coinbase, ordering it to maintain a pause on its prediction market offerings in the state, according to an order dated Thursday, March 26, after an initial temporary restraining order issued in early February. In the March 26 order, Nevada First Judicial District Court Judge Kristin Luis wrote that Coinbase did not dispute it offered 'event-based contracts' tied to sports and other events, including college basketball games, college and professional football games and elections, which she said meet Nevada's definition of "sports pools." The judge noted Coinbase's partnership with Kalshi. As with the Kalshi restriction, the Coinbase order bars sports, election and entertainment contracts in Nevada at least until broader litigation is resolved. The judge gave Coinbase 60 days to "make technological enhancements" to comply. Nevada and Washington federal district courts are both within the Ninth Circuit Court of Appeals. Read more: Kalshi secures license to offer margin trading to institutional investors