Washington judge goes after Kalshi, blocks event contracts

• Kalshi faces another setback in Washington state after a judge sides with the state’s arguments
• Kalshi has been ordered to at least temporarily stop offering event contracts, with the judge citing potential consume harm
• The platform is facing similar pushback in other states, including Michigan, Massachusetts, New York, Nevada, and elsewhere

Kalshi continues to face increased scrutiny in the United States after a Washington judge granted the state’s request to block the platform’s event contracts in the jurisdiction. The effect of the decision has been deferred to early next month when Kalshi will have to comply.

Washington judge sides with state against Kalshi - case ongoing

The decision was reached on Monday, July 20, when Judge John McHale of the King County Superior Court sided with Washington in the state’s request to limit the company’s ability to offer the contested form of trades.

Washington is hardly the only state to have gone after Kalshi, with Nevada, Michigan, Kentucky, Minnesota, and Massachusetts.

On July 8, New York issued a similar order, denying Kalshi’s request for preliminary injunction against a decision to block event contracts in the Empire State.

According to McHale, the plaintiff, i.e., the state, had demonstrated that Washington consumers stood to suffer "substantial injury" from what he described as illegal gambling activities.

Kalshi and other prediction markets, however, maintain that what they offer is not tantamount to gambling, as it is regulated under the Commodity Futures Trading Commission (CFTC).

Consumers could be harmed worse than Kalshi’s business interest

In rendering his decision, the judge also added that the potential harm to consumers was greater than the presumed harm his decision would have on Kalshi.

The legal battle surrounding prediction markets is ongoing, with businesses arguing that local state gaming laws do not take precedence over established federal laws overseen by the CFTC.

This argument is beginning to crack in places, as recent events from Washington, Massachusetts, Michigan, New York and elsewhere have demonstrated, but Kalshi is hardly out.

Judge Hale, for example, argued in a 14-page decision that the Commodity Exhange Actdoes not preempt Washington State's gambling laws.

Tensions have risen also over the exploitation of such platforms by insiders who have been placing trades on events that they had non-public information on.

For example, a long-time President Donald Trump telepromopter operator is reportedly settling a case against him, after it transpired that he had been betting on POTUS' speeches.

This is hardly an insolated case. To their credit, platforms such as Kalshi and Polymarket have flagged such incidents and have doubled down on monitoring for suspicious trading patterns.

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