Washington state has filed a lawsuit against Kalshi, accusing the prediction market platform of operating an illegal gambling operation under state law. Attorney General Nick Brown stated Kalshi’s business model-offering financial payouts based on event outcomes-matches the legal definition of gambling: staking value on a contingent event with chance involved.
The state asserts Kalshi circumvented gambling regulations by labeling its products as "prediction markets," despite functioning identically to sportsbooks. Each bet risks money and promises payouts, meeting all legal criteria for gambling under Washington’s Consumer Protection and Gambling Acts.
Kalshi has moved to transfer the case to federal court, arguing the issue is already under federal litigation and that the state provided no prior warning or dialogue. The move follows similar actions in Nevada, where a judge issued a temporary restraining order blocking Kalshi’s operations, and Arizona, which filed criminal charges against the company for unlicensed election wagering.
The Commodity Futures Trading Commission has previously endorsed prediction markets, but state regulators increasingly view them as unlicensed gambling operations. Across the U.S., at least five states are now investigating or suing Kalshi and competitors like Polymarket over similar claims.
