State Court Rules Against Kalshi in Washington Preemption Dispute
In a significant development, King County Superior Court of Washington has issued a preliminary injunction against KalshiEX, ruling that the federal Commodity Exchange Act (CEA) does not override the state’s gambling regulations. Washington Kalshi Court
Judge John F. McHale emphasized that while the CEA grants the Commodity Futures Trading Commission (CFTC) authority over certain transactions, it does not explicitly preempt Washington’s gambling laws. The ruling highlights the importance of the savings clauses that uphold the jurisdiction of both state regulators and courts.
The court pointed to the CEA’s event-contract provision, which allows the CFTC to declare contracts involving gaming or similar activities unlawful if they conflict with federal or state law and are against public interest. Although the CFTC designated KalshiEX as a contract market in 2020, this federal recognition does not determine whether the platform complies with Washington’s Gambling Act (RCW 9.46), the order clarified.
Washington Attorney General Nick Brown commented on the ruling, stating, “This victory is the first step toward holding Kalshi accountable for their brazen violations of Washington law.”
The court also expressed the likelihood that Washington would succeed on claims related to the Gambling Act, Consumer Protection Act, and laws governing the recovery of money lost through gambling. It ordered Kalshi to preserve relevant platform logs, communications, geolocation data, and marketing information related to Washington.
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Both parties are instructed to submit proposed language for the injunction and any supporting briefs by noon on August 3.
This decision comes shortly after a victory for Washington’s enforcement of gambling laws. On July 8, New York Attorney General Letitia James and Governor Kathy Hochul announced that the state had succeeded in its legal battle against Kalshi in its dispute with the New York State Gaming Commission.
Washington’s order, issued nine days later, continues to uphold the authority of both states to regulate prediction markets while Kalshi contests their jurisdiction over event contracts. Kalshi has argued that states lack the authority to regulate prediction markets altogether. However, the Washington court rejected that argument, stating that compliance with Washington’s laws would not interfere with Kalshi’s adherence to federal regulations. Washington Kalshi Court
