The Kalshi Washington gambling injunction hardened this week after King County Superior Court Judge John McHale signed an amended preliminary order barring KalshiEX LLC from offering event contracts tied to sports, elections, politics, entertainment, culture, technology, science, and so-called ‘mentions’ to Washington state residents. Contracts linked to commodities, climate, economics, and finance are exempt.
The amended order, signed Wednesday, operationalises the preliminary injunction McHale granted in July. Kalshi must implement IP-address and residency-based geofencing by 19 August, with a full GeoComply multi-source geofencing system in place by 2 September to block Washington users from purchasing covered contracts.
A Case Built on State Consumer and Gambling Law
The Washington Attorney General’s original lawsuit, filed on 27 March, alleged violations of the Consumer Protection Act and the Recovery of Money Lost at Gambling Act. The AG’s office contended that Kalshi’s federally regulated event contracts constitute illegal gambling under Washington law, pointing to markets on measles case counts, witness testimony in a child trafficking hearing, and potential outcomes in the Iran conflict.
The Washington AG’s office stated Kalshi ‘has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more,’ and is seeking to halt the activity, recover money lost by Washingtonians, and assess civil penalties.
The Washington Gambling Commission had already put Kalshi on notice on 9 December 2025, issuing a formal statement that prediction market and events contracts are not authorised in the state, according to Courthouse News Service. McHale’s order noted that ‘Kalshi’s advertisements that it offers “legal betting” in Washington state are likely to mislead a reasonable consumer that such gambling activities are legal under state law.’
Washington Attorney General Nick Brown said Thursday: ‘We’re holding Kalshi accountable for running an illegal gambling operation.’
The Federal Preemption Question Has No Clean Answer Yet
Kalshi’s core legal position is that the Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over its exchange as a designated contract market, and that the Commodity Exchange Act (CEA) preempts state gambling statutes. McHale rejected that argument, and the Washington Court of Appeals declined to stay the injunction.
The federal courts are less unified. On 6 April 2026, a divided U.S. Court of Appeals for the Third Circuit ruled 2-1 in KalshiEX LLC v. Flaherty, becoming the first federal appellate court to hold that the CEA preempts state gambling laws as applied to sports-related event contracts on CFTC-registered exchanges. On 7 July, U.S. District Judge Analisa Torres of the Southern District of New York reached the opposite conclusion, according to TechTimes. The resulting circuit split leaves the preemption question unresolved at the federal level.
The CFTC moved separately on 11 August, issuing Release 9281-26 under Section 8a(9) of the CEA, ordering Kalshi to continue operating in accordance with CEA Core Principles. That release was a direct response to the New York Attorney General’s 31 July lawsuit seeking a temporary restraining order and $36 billion in damages. It does not directly override the Washington state court order.
Washington is far from alone. According to Courthouse News, a Nevada judge granted a temporary restraining order against Kalshi in April, Massachusetts secured a preliminary injunction in February, and Kalshi lost a bid to block New York from regulating its markets in the same period.
Kalshi filed a motion for reconsideration of the amended Washington injunction, seeking to vacate portions of it or stay its operative provisions under terms comparable to those granted to a competitor operating under a state non-enforcement agreement. The KOMO News report on the motion notes Kalshi argued the disparity could push customers to rivals and erode its market position. A hearing is scheduled for 2 September without oral argument.
The Washington Indian Gaming Association applauded McHale’s ruling, pointing out that state law restricts sports betting to physical tribal casinos to protect consumers and tribal sovereignty, a political constituency that gives Olympia little incentive to soften its stance.
With the reconsideration hearing set for the same day as the GeoComply deadline, 2 September is the next date that could shift the terms of the Kalshi Washington gambling injunction either further or back.
