A state judge in Washington has issued a preliminary injunction that will temporarily block federally regulated prediction market platform Kalshi from offering sports-related event contracts to residents, adding another setback to the company’s ongoing legal battles across multiple U.S. states.
King County Superior Court Judge John McHale ruled on July 20 that Kalshi operates illegal gambling activities in violation of Washington state gambling laws. The court found that the state is likely to succeed in its case and that the public interest and potential harm to consumers outweigh the harm to Kalshi. The injunction will not take effect before August 5, with additional submissions from both parties due by August 3.
The dispute centers on whether sports event contracts offered by Kalshi are exclusively regulated by federal commodities law or also subject to state gambling rules. Kalshi, registered with the Commodity Futures Trading Commission (CFTC), argues that the Commodity Exchange Act (CEA) preempts state laws. Judge McHale explicitly rejected that position, stating the CEA does not preempt Washington’s gambling statutes.
Kalshi spokesperson responded that ‘states don’t have jurisdiction to regulate prediction markets’ and cited past court decisions, including a Third Circuit ruling. The company expressed disappointment with the state’s enforcement action. The Washington Attorney General’s Office originally sought the injunction, along with restitution for consumers and civil penalties.
The ruling is part of a wider national legal conflict. According to sports and gaming attorney Daniel Wallach, states have won 19 of 23 preliminary injunction or restraining order requests in prediction-market cases so far. Washington is poised to join Nevada and Michigan in restricting Kalshi’s sports contracts. The CFTC has taken the opposite stance, suing states like New York to assert exclusive federal authority over event contracts. Kalshi remains the largest prediction market by volume, recording $33 billion in June, compared to Polymarket’s $13.95 billion.
The legal landscape remains fragmented, with some states like North Carolina passing legislation to recognize federally registered prediction markets. The Washington case will continue beyond the preliminary stage, and the broader federal–state jurisdictional question is expected to eventually reach the Supreme Court.
