Washington Attorney General Nicholas W. Brown filed a lawsuit against Kalshi, accusing the platform of operating an illegal online gambling service. The company allows users to wager on a wide array of events, ranging from sports and elections to unusual scenarios like “measles cases this year” or potential outcomes in international conflicts.
Kalshi promotes itself as a “prediction market,” but the state argues that its operations meet the definition of gambling under Washington law, which defines gambling as “staking or risking something of value upon the outcome of a contest of chance or a future contingent event.” The lawsuit seeks to halt Kalshi’s activities, recover losses incurred by Washington residents, and impose civil penalties.
“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,” said Brown.
Platform Operations Mirror Traditional Gambling
Kalshi entered the betting market in 2025, initially allowing residents to place wagers on college and professional sports. It offers spread bets, over/under bets, and proposition bets, all common in sportsbooks and casinos, but illegal in Washington. The platform advertises its ability to “bet on anything,” instructing users that its “prediction market” branding exempts it from gambling restrictions.
The platform has targeted younger audiences, including college students, paying influencers to promote its service. At one point, Kalshi reportedly attempted to recruit a 15-year-old influencer, raising further regulatory concerns.
The state claims that Kalshi also violates laws on professional gambling and bookmaking by charging fees for bets and operating an internal market-making arm, Kalshi Trading. Additional allegations include transmitting gambling information online and maintaining unlicensed gambling equipment.
Legal Context and Recovery of Losses
Washington has strictly regulated gambling since its statehood in 1889, with the 2006 amendment of the 1973 Gambling Act explicitly banning internet gambling. The Recovery of Money Lost at Gambling Act allows the state to pursue compensation for money lost through illegal betting. According to the complaint, “illegal gambling and the recovery of money lost at gambling is a matter of public concern,”granting the Attorney General authority to recover losses for Washingtonians.
While the total losses by residents are unclear, the platform has seen roughly $55 billion staked nationwide, generating about $600 million in fees. Washington represents around 2.4% of the US population, but may account for a larger share of Kalshi activity due to the lack of legal statewide online betting.
Possible Federal Court Move
Kalshi may attempt to move the case to federal court, citing arguments such as the “bona fide business transactions” exception under contract law, federal preemption via the Commodity Exchange Act, or its actions as a federal officer regulating trading. Previous courts in Nevada and Massachusetts have rejected similar claims.
Washington joins Massachusetts, Nevada, and Michigan in suing Kalshi, with Arizona pursuing criminal charges for violations of similar laws. To date, Nevada is the only state where the platform has been compelled to remove certain contracts.
Source:
“Washington sues online betting platform Kalshi for illegal gambling“, atg.wa.gov, March 27, 2026
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