Prediction market Kalshi must continue operating under federal rules even as a Washington state court has barred it from offering most contracts to local residents. The dual actions create a split between national oversight and state-level limits on sports, elections and other event contracts.
The developments underscore growing tension between state gambling laws and federally regulated derivatives markets.
The Drivers of This Activity
A King County Superior Court judge issued a preliminary injunction finding that Kalshi likely violated Washington’s Gambling Act and Consumer Protection Act. The order requires the company to stop offering, accepting or facilitating contracts on sports, elections, politics, entertainment, culture, technology, science and certain mentions for Washington users.
Kalshi must activate an initial IP-address and residency-based geofence by 19 August and a multi-source system by 2 September. Contracts involving commodities, climate, economics and finance remain available, and users can still close existing positions.
Separately, the Commodity Futures Trading Commission exercised emergency authority on 11 August after Kalshi reported a market emergency linked to a New York lawsuit. The CFTC directed the exchange to keep performing its functions in line with the Commodity Exchange Act’s core principles and normal practices.
Impact and Broader Context
The Washington ruling forces Kalshi to implement technical blocks that shrink its local offerings, while the federal directive prevents a broader shutdown and reinforces the CFTC’s claim of exclusive jurisdiction over these markets.
The situation fuels debate over whether event contracts should fall under state gambling statutes or federal derivatives rules. State officials emphasize consumer protection and long-standing local laws. Federal regulators and the platform stress the need for a uniform national market.
Observers will track Kalshi’s compliance with the geofencing deadlines, any appeals, and whether similar state actions emerge elsewhere. Outcomes in these cases will influence how prediction markets operate across the United States.
Source: Washington State Attorney General press release; CFTC Press Release 9281-26
Original source: Washington AG official announcement; CFTC emergency authority order