Hassan Maishera
TL;DR
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A Washington court ordered Kalshi to stop offering contracts involving sports, elections, politics, entertainment, and several other categories.
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Kalshi must introduce IP- and residency-based geofencing by August 19 and a multi-source system by September 2.
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The company may continue offering contracts tied to commodities, climate, economics and finance.
A Washington court has issued a final order requiring prediction market operator Kalshi to stop offering most of its event contracts in the state after finding that the company likely violated local gambling regulations.
The order covers contracts involving sports, elections, politics, entertainment, culture, technology, science, and whether particular words or topics will be mentioned during an event.
Kalshi must also introduce stronger controls to prevent Washington residents from accessing the restricted markets.
Kalshi Faces Strict Geofencing Deadlines
Under the order, Kalshi must implement an IP address- and residency-based geofencing system by August 19.
The company must then introduce a more comprehensive, multi-source geofencing system by September 2. These measures are intended to identify users in Washington and prevent them from accessing event contracts prohibited by the court.
Multi-source geofencing typically combines several forms of location data rather than relying exclusively on an IP address, which users may obscure using virtual private networks and other tools.
The court also prohibited Kalshi from facilitating restricted wagers through third parties, potentially affecting companies that distribute its contracts through their own platforms.
In addition to limiting access, the court barred Kalshi from promoting the affected event contracts to consumers in Washington.
The ruling found that marketing allegedly unlawful gambling products could constitute an unfair or deceptive business practice.
Washington Attorney General Nick Brown accused Kalshi of earning substantial revenue from contracts based on sporting events, elections, natural disasters and geopolitical developments, including events connected to the Iran war.
Brown said the state would continue enforcing its laws and pursuing allegations that Kalshi misled consumers as the wider case proceeds.
Kalshi had not issued a public response to the final order at the time of reporting.
Some Kalshi Markets Remain Available
The Washington ruling does not impose a complete ban on Kalshi’s operations in the state.
The company may continue offering contracts connected to commodities, climate, economics and financial markets. These products more closely resemble the types of derivatives traditionally regulated at the federal level.
The distinction means Washington residents could still trade contracts based on matters such as economic indicators, commodity prices or financial outcomes, provided the markets comply with the order.
The restrictions instead focus largely on contracts that state authorities believe resemble conventional gambling products.
The final order follows a preliminary injunction that was initially granted in July.
Kalshi asked the Washington Court of Appeals to pause the injunction while the company challenged the decision. The appeals court denied that request, leaving the restrictions and implementation deadlines in effect.
The latest decision adds to the legal pressure on Kalshi as regulators and courts consider whether its federally regulated event contracts can be subjected to state gambling laws.
States Challenge Kalshi’s Federal Regulation Argument
Kalshi maintains that it operates under the exclusive oversight of the Commodity Futures Trading Commission because its contracts are listed through a federally regulated derivatives exchange.
The company argues that the Commodity Exchange Act gives the CFTC authority over its event contracts, potentially preempting conflicting state gambling rules.
Several states reject that interpretation. They contend that contracts based on sporting events and similar outcomes are effectively wagers and must comply with state licensing, taxation and consumer-protection requirements.
The conflict has produced a growing number of lawsuits and enforcement actions across the United States, raising questions about the division of regulatory authority between state governments and the CFTC.
The Washington order came on the same day that Baltimore sued Kalshi and Polymarket over allegations that their sports contracts amount to unlicensed gambling.
Baltimore’s case against Kalshi also named Coinbase, Robinhood and Webull, which distribute the company’s event contracts through their respective platforms.
Like Washington, Baltimore argues that federal regulation does not give prediction market operators the right to bypass local gambling and consumer-protection laws.
These disputes could determine how prediction markets operate across the country and whether platforms must restrict certain products on a state-by-state basis.
