Washington state sued prediction market operator Kalshi on Friday, accusing the company of violating state gambling statutes and consumer protection laws. The attorney general’s complaint alleges Kalshi ran online wagering in violation of Washington’s ban on internet gambling and names breaches of the Washington Consumer Protection Act, the Gambling Act, and the Recovery of Money Lost at Gambling Act.
The suit says Kalshi’s website and app present a slate of events with odds that determine payouts, functioning like a sportsbook. Washington’s complaint contends Kalshi brands itself as a “prediction market” to avoid gambling labels, but its mechanics—users risking money on chance-based, future events with promised payouts—meet the state’s legal definition of gambling.
Kalshi quickly sought to move the case to federal court, arguing the issues are already under dispute in other federal litigation and that the state provided no prior warning or dialogue before filing suit.
This Washington action is the latest in a string of state enforcement moves. In March, a Nevada judge granted a 14-day temporary restraining order that halted Kalshi’s operations in the state after the Nevada Gaming Control Board argued the company’s event contracts likely violate state gambling laws. Kalshi has countered that such contracts fall under the exclusive authority of the U.S. Commodity Futures Trading Commission, which has previously sided with some prediction market offerings in other matters.
Days earlier, Arizona Attorney General Kris Mayes filed criminal charges, alleging Kalshi ran an illegal gambling business and offered unlawful election wagers in Arizona. Other state gaming regulators have filed civil suits asserting the platform provided sports wagering or other unlicensed betting to residents.
Lawmakers and regulators have also expressed growing concern about prediction markets that permit wagers on U.S. military actions, citing risks related to insider information and national security. The recent wave of litigation highlights a broader clash between state gambling enforcement and companies that present betting products as “prediction markets” rather than traditional gambling operations.
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