A King County Superior Court judge has issued a final order requiring Gizmodo to shut down the majority of its betting operations within Washington state. Judge John McHale ruled that the company is running an illegal gambling site prohibited by state law, noting that Kalshi never obtained a license from the state’s Gambling Commission.
Washington Judge Rules Kalshi Prediction Market Illegal
The ruling follows a legal battle over a preliminary injunction that Kalshi had been fighting since mid-July. In his decision, McHale stated that Kalshi provides online gambling activities
which the company describes as a prediction market.
The judge found that because each bet risks money, relies partly on chance, and promises a payout to winners, the platform operates as a gambling site.
Scope of the Ban and Penalties
The court order specifically prohibits bets related to the following categories:
- Sports and entertainment
- Elections and politics
- Culture, tech, and science
- “Mentions,” which McHale defined as wagers on whether public figures will utter specific words or phrases
Certain categories remain exempt from the order, including bets on economics, finance, climate, and commodities. To comply with the ruling, Kalshi must implement a geofence by Sept. 2, 2026. If the company continues to operate without a geofence past that date, it faces penalties of $120,000 for every day of non-compliance.
Beyond the legality of the bets, McHale found that Kalshi’s marketing was likely to deceive a reasonable consumer
into believing that Washington state allows gambling. Under state law, virtually all betting is illegal except for activities on tribal land.
Jurisdictional Conflict with Federal Agency
Kalshi has contested the ruling by arguing that state laws do not apply to its operations. A company spokesperson told Gizmodo and Ars Technica that the U.S. Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction
over the exchange. Kalshi maintains that it offers contracts similar to commodity markets, such as those speculating on the price of oil or corn, rather than outright gambling.
This jurisdictional dispute is part of a broader national conflict. The CFTC has previously ordered Kalshi to continue operating in Michigan and New York despite similar state lawsuits alleging the platform is illegal. The Trump administration has also argued that the federal government has exclusive jurisdiction over these platforms and has sued states attempting to regulate them.
Broader Industry Impact and Allegations
The conflict in Washington is part of a wider trend of state-level opposition to prediction markets. According to the American Gaming Association, officials in 11 states have issued cease and desist orders to prediction market companies, and litigation has occurred in at least eight states. The association estimates that states have lost over $570 million in sports gambling tax revenues due to these platforms.
While Kalshi’s spokesperson denied that the company offers markets on terrorism, war, death, or wildfires, the company’s CEO, Tarek Mansour, previously referenced a “death carveout” regarding a market on the death of former Iranian Supreme Leader Ali Khamenei. Additionally, the New York Times reported that the CFTC received over 50 red flags regarding Kalshi and over 90 regarding Polymarket this year, suggesting both sites may be rife with insider traders.
Kalshi stated it respectfully disagree[s] with the court’s decision
and is currently considering all legal options.