Washington Attorney General Sues Kalshi for Alleged Illegal Gambling

• Washington Attorney General Nick Brown today filed a lawsuit against Kalshi
• The lawsuit alleges certain Kalshi prediction market offerings constitute illegal gambling in the state
• Attorney General Brown reports Kalshi tries to skirt state law by branding its betting platform as a “prediction market”

Washington Attorney General Nicholas W. Brown today filed a lawsuit against Kalshi alleging the prediction market offerings from the company constitute illegal gambling in the state.

Attorney General Brown filed the lawsuit in the State of Washington King County Superior Court, alleging Kalshi is in direct violation of the state’s prohibition of online gambling. While online sports betting is allowed in Washington, it is only allowed on tribal casino property and strictly prohibited off tribal land.

“Kalshi wants people betting on almost everything possible in life—the outcome of elections, Supreme Court cases, even wars. For Kalshi, every event, every tragedy is nothing more than a potential way for Americans to risk their fortunes and for Kalshi to get rich,” Brown said in a press release. “As they advance this bleak vision of the future, they line their pockets and pat themselves on the back for sneaking around Washington’s gambling laws. No more.”

Lawsuit Alleges Kalshi Violates State Gambling Laws

Brown notes in the lawsuit that Kalshi’s gambling operations “violate numerous provisions of Washington’s Gambling Act, as well as the Consumer Protection Act and the Recovery of Money Lost at Gambling Act.”

“In direct violation of this prohibition and public policy, Kalshi operates its online betting market nationwide, including in Washington and other states that prohibit online gambling. In its advertising and marketing, Kalshi specifically promotes illegal online sports gambling in Washington state,” Brown reported in the lawsuit.

Additionally, Brown said Kalshi has marketed itself to young people between the ages of 18 and 21, coaxing college students to their platform by routinely paying influencers to promote their gambling app to their peers.

The definition of gambling under Washington law is “staking or risking something of value upon the outcome of a contest of chance or a future contingent event,” Brown reported, and Kalshi’s activities fall squarely within that definition.

“Under Washington law, every core feature of Kalshi’s illegal gambling activities—its wagers, fees, and online transmission of gambling information—constitutes illegal online gambling,” Brown wrote in the lawsuit.

The lawsuit is seeking a permanent injunction from Kalshi’s alleged unlawful conduct in the state, restitution for consumers of money or property unlawfully acquired by Kalshi, and the court assess civil penalties for every violation of the Consumer Protection Act.

Who Regulates Event Contracts?

Washington is the latest state to levy a lawsuit against Kalshi, as states continue to jockey for power to regulate sports event contracts in the country. Massachusetts Attorney General Joy Campbell was the first to file a lawsuit against the prediction market company, taking action last September.

Companies such as Robinhood and Kalshi believe that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in New Jersey, Nevada, and Maryland to defend its practices. These companies believe the CFTC is the only regulatory body that can legally block contracts from being offered to customers.

State gaming regulators maintain the markets need to be beholden to regulations, taxes, and license fees that sports betting and gaming operators are required to follow.

The prediction market companies believe their offerings are not required to comply with state laws, as they have been preempted by the Commodity Exchange Act.