Kalshi Bars Washington Users, Seeks Injunction Reconsideration by Sept. 2

Kalshi has barred Washington users from accessing its prediction markets as the company asks a King County judge to reconsider an injunction that has sharply curtailed its business in the state. What’s happening now - On Aug. 21 Kalshi filed a motion asking Judge John McHale to revisit an amended preliminary injunction that limits the exchange’s Washington operations. The judge will consider the request on Sept. 2 (no oral argument). The injunction remains in effect while the court reviews Kalshi’s motion. - Kalshi told the court it has already blocked Washington customers. The injunction’s record-preservation rules and market restrictions remain active. The court’s technical deadlines - By Aug. 19 Kalshi was required to implement IP- and residency-based controls. A broader geolocation system (GeoComply), which uses multiple location sources, had to be fully operational by Sept. 2. - If Kalshi misses the Sept. 2 GeoComply deadline, it could face a $120,000-per-day penalty unless it files a sworn explanation for any delay. What markets are affected The order blocks Kalshi from offering contracts tied to sports, elections, politics, entertainment, culture, technology and science, plus certain “mentions” markets. Why Washington says this is illegal Washington Attorney General Nick Brown contends Kalshi’s event contracts amount to unlicensed gambling. A state court previously rejected Kalshi’s initial jurisdiction argument and found Washington was likely to prevail at the preliminary stage — though that is not a final ruling on all claims. Kalshi’s legal strategy Kalshi continues to argue that federally regulated exchanges and their event contracts fall under the Commodity Exchange Act (CEA) and the exclusive authority of the CFTC, preempting state gambling laws. In its Aug. 21 motion, Kalshi highlighted a pivotal development: an Aug. 18 agreement between Washington officials and North American Derivatives Exchange (operating as OG). Under that deal, the state agreed not to pursue civil or criminal enforcement against OG’s federally traded event contracts while related appeals are decided. Kalshi says the agreement shows unequal treatment: “The Washington state government has blocked your right to trade freely on Kalshi,” the company told the court, arguing that “the very event contracts that the state deemed intolerable from Kalshi are now freely available” from a competitor. The court has not accepted Kalshi’s characterization, and Kalshi’s contention that OG is “identically situated” remains its legal claim rather than an established fact. Washington may counter that procedural differences or the terms of the OG deal distinguish the two situations. Broader legal context - Washington joins Michigan and Nevada in ordering location controls on Kalshi while pursuing claims tied to unlicensed sports wagering. Kalshi has appealed or otherwise challenged those orders. - Courts are split nationally. A federal judge blocked Minnesota’s ban on prediction markets after finding registered exchanges were likely to succeed on part of their preemption argument. Meanwhile, ongoing disputes exist in New York, Connecticut, Massachusetts, Ohio, Maryland, Utah and Arizona. Outcomes are likely to vary by contract type, statutory language and case posture. CFTC stance and future rulemaking CFTC Chairman Michael Selig said on Aug. 20 the agency will continue asserting exclusive jurisdiction over federally regulated event contracts, while acknowledging retail-protection concerns. He said the commission will soon propose amendments to Parts 38 and 40 of its rules to address consumer protection, product governance, market design, listing standards and incentive programs. The CFTC has already floated proposals clarifying how it might assess contracts involving gaming, war, terrorism, assassination or illegal activity. However, proposed rules must go through formal federal rulemaking and will not automatically overturn state court orders or settle whether federal law displaces state gambling laws. What to watch next - Sept. 2: Judge McHale’s decision on Kalshi’s reconsideration request and the GeoComply operational deadline. - Until the court acts, Washington users will remain blocked from the restricted markets. This dispute could reshape how prediction markets operate across state lines and whether federal oversight of event contracts supersedes state gambling laws. We’ll follow developments and report on any new court orders or CFTC rulemaking as they emerge.