The Attorney General of Washington, Nick Brown, has initiated legal action against the prediction market platform Kalshi, claiming that the company is running an unlawful online gambling operation that violates state regulations.
This civil lawsuit, lodged in the King County Superior Court, aims to halt Kalshi's activities within Washington, seek restitution for local residents, and impose financial penalties, as outlined in the legal complaint.
Brown contends that Kalshi's branding as a “prediction market” conceals its true nature as a gambling enterprise, accusing the firm of attempting to “financialize everything.”
“Kalshi is essentially just a bookmaker with a sophisticated name and substantial venture capital backing,” Brown stated. “They take pride in circumventing Washington’s gambling laws, but this goes beyond mere cleverness. It’s deceitful and illegal.”
The lawsuit asserts that Kalshi provides products akin to those found in sportsbooks, such as spread bets, over/under wagers, and parlays, despite the fact that online gambling is largely prohibited in Washington, except for in-person betting at tribal casinos.
State attorneys highlighted Kalshi’s own promotional materials, which include statements that users could “bet on the NFL in all 50 states” and “bet on everything,” along with an advertisement claiming customers had “found a way to bet on the NFL even though we live in Washington.”
Founded in 2018, Kalshi positions itself as “an exchange dedicated to trading on the outcome of future events” and operates under the oversight of the Commodity Futures Trading Commission as a prediction market. The company argues that federal regulations take precedence over state gambling laws.
The complaint details that Kalshi enables users to “trade” — or “bet,” from the state's perspective — on a variety of outcomes, including sports events, elections, weather, public policy decisions, and cultural milestones. It also mentions offerings like “mention markets,” where users wager on specific words during broadcasts. Brown raised concerns that the platform facilitates betting on sensitive issues, prompting larger societal questions.
“Should everything be treated as gambling?” he questioned. “Do we want a society that shifts from worrying about the human toll of war to wagering on the over/unders of that conflict?”
The lawsuit also scrutinizes Kalshi’s business model, alleging that the company utilizes an affiliate, Kalshi Trading LLC, to engage in wagers.
“In this manner, Kalshi functions similarly to the house in a conventional gambling setup,” the complaint asserts.
Elisabeth Diana, the head of communications for Kalshi, disputed Brown’s portrayal of the company and noted that the AG filed the lawsuit prior to a scheduled meeting with them.
“Had AG Brown not sued us before our planned meeting, he would have understood that we do not offer markets on war,” Diana stated. She emphasized that “as recognized by other courts, Kalshi is a regulated, nationwide exchange for real-world events, operating under exclusive federal jurisdiction. This is markedly different from the services provided by state-regulated sportsbooks and casinos. We are confident in our legal position.”
This case is part of a larger trend of scrutiny facing Kalshi, with Arizona having filed criminal charges against the platform and Nevada also pursuing legal action. According to the complaint, Kalshi is currently dealing with over 20 civil lawsuits.
The emergence of prediction markets has garnered support from the Trump administration, with CFTC Chair Mike Selig referring to these platforms as “exciting products” and warning, “To those who challenge our authority in this domain, we will see you in court.”
Simultaneously, lawmakers are considering new regulations. A bipartisan bill proposed by U.S. Senators Adam Schiff and John Curtis seeks to prohibit sports betting on prediction market platforms.
Washington state enforces some of the most stringent gambling laws in the nation, having banned internet gambling since 2006 and permitting sports betting only in-person at tribal casinos.