A Washington state judge has issued a preliminary injunction against Kalshi, determining that the company is likely to lose in its defense against claims that its event contracts breach state gambling regulations. The court dismissed Kalshi's assertion that federal law supersedes state enforcement.
The judge's order, shared by gambling attorney Daniel Wallach on social media, described Kalshi's operations as illegal gambling. The court stated, “Kalshi conducts business in King County by engaging in unlicensed and illegal gambling activities, such as illegal gambling games, bookmaking, and professional gambling related to betting on sports, elections, and culture.”
Furthermore, the ruling indicated that Kalshi knowingly accepts funds from consumers in Washington through its online platform, profiting from the wagers and fees it collects.
Wallach noted that courts have ruled on 23 preliminary injunction requests in prediction market cases, with 19 outcomes favoring the states.
The court found that Washington has a strong case against Kalshi under various state gambling laws, including the RMLGA and RCW 4.24.070, indicating that Kalshi's activities violate these statutes.
Additionally, the judge highlighted that Kalshi's advertising could infringe upon Washington’s Consumer Protection Act, suggesting that claims of offering 'legal betting' could mislead consumers regarding the legality of such activities.
In rejecting Kalshi's argument regarding federal preemption, the court asserted that the Commodity Exchange Act does not override Washington State's gambling laws, emphasizing that state regulations are in place to enforce these laws effectively.