Table of Contents
Washington Attorney General Nick Brown filed a civil lawsuit against prediction market platform Kalshi on March 27, alleging the company violated state gambling and consumer protection laws by operating what Brown called an illegal online betting service.
The suit, filed in King County Superior Court, seeks to halt Kalshi’s operations in Washington, recover money lost by state residents, and assess civil penalties. Washington becomes the fourth state to sue Kalshi in state court, following Massachusetts, Nevada, and Michigan. Arizona went further in March, filing criminal charges — believed to be the first such action against a prediction market operator.
The State’s Case
Washington has maintained a ban on internet gambling since 2006, with sports betting permitted only at tribal casinos. The complaint argues Kalshi’s products — spread bets, over/under wagers, proposition bets, and parlays on college and professional sports, plus markets on elections, Supreme Court cases, geopolitical events, and entertainment — meet state definitions of gambling, professional gambling, and bookmaking.
“Under longstanding, well-established, and unambiguous Washington state law, Kalshi’s gambling operation is illegal,” the complaint states. The AG’s office noted that more than 90% of activity on Kalshi and 89% of its revenue last year derived from sports betting, with total trading volume reaching $23.8 billion in 2025.
Brown was pointed in his framing at a press conference Friday.
“Kalshi wants people betting on almost everything possible in life — the outcome of elections, Supreme Court cases, even wars. For Kalshi, every event, every tragedy is nothing more than a potential way for Americans to risk their fortunes and for Kalshi to get rich. As they advance this bleak vision of the future, they line their pockets and pat themselves on the back for sneaking around Washington’s gambling laws. No more.”
The complaint also cited a Kalshi advertisement in which one person texts another that they “found a way to bet on the NFL even though we live in Washington” — which the state said demonstrates the company knowingly circumvented state law. Additional allegations include targeting college students through influencer campaigns and briefly attempting to recruit a 15-year-old influencer.
Kalshi’s Response
Kalshi filed to move the case to federal court, asserting it had received no prior warning or dialogue from Washington before the suit was filed.
Elisabeth Diana, Kalshi’s head of communications, contested Brown’s characterisation of the company’s markets.
“As other courts have recognised, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction. It’s very different from what state-regulated sportsbooks and casinos offer their customers. We are confident in our legal arguments.”
Diana added that the AG filed the suit before a planned meeting between the two parties had taken place. Kalshi’s CEO Tarek Mansour, speaking separately at an industry event, said state legal pressure had been “mostly positive” for the business — “like free press, basically.”
The company has consistently argued in other cases that its federal designation as a CFTC-regulated designated contract market preempts state gambling laws, a position backed by the Trump administration and senior CFTC leadership including Chair Brian Quintenz.
Growing State-Federal Divide
The Washington filing adds to an escalating conflict between state gambling regulators and the prediction markets sector. Nevada secured a temporary restraining order against Kalshi in March, following earlier action against Polymarket, and separately won a preliminary injunction against Coinbase’s prediction market product. Nevada is the only state where Kalshi has been forced to remove contracts from its platform to date. A hearing on whether to extend that restriction was scheduled for April 3.
Massachusetts and Utah also have ongoing state court battles against the platform. Coinbase, which had partnered with Kalshi to offer prediction market products, faced separate scrutiny this week after users reported receiving push notifications resembling gambling advertisements during March Madness. CEO Brian Armstrong said the notifications were the result of a system bug.
Kalshi has accumulated more than 20 civil lawsuits across multiple jurisdictions. In total, users have staked around $55 billion on the platform since its launch, with Kalshi earning approximately $600 million in fees, according to InGame analysis.
The federal versus state jurisdiction argument is widely expected to reach higher federal courts. The outcome will determine whether CFTC-regulated prediction markets can operate across the United States irrespective of state gambling prohibitions, or whether each state retains the authority to block access within its borders. Nevada’s action against Coinbase and Australia’s classification of prediction markets as gambling signal that regulatory pushback is not limited to any single jurisdiction.
Source: EGR Global / Washington State Office of the Attorney General
