Washington Targets Kalshi in New Gambling Lawsuit

Washington is the latest state to take legal action against Kalshi, the prediction market platform accused of running contracts that amount to illegal gambling according to state law. 

“Each Bet Risks Money”

The lawsuit, filed on Friday, March 27, in King County Superior Court by Attorney General Nicholas W. Brown, claims the company’s operations violate some of the strictest gambling rules in the United States.

Once again, at the core of the case is the very definition of gambling as seen by Washington: risking something of value on the outcome of a contest of chance or a future event outside a person’s control, with the expectation of a reward. 

The complaint says that Kalshi’s markets perfectly fit that exact definition, whether they involve sports, politics, or cultural events.

“Each bet risks money, relies in part on chance, and promises a payout to winners,” the lawsuit states. 

Washington law allows sports betting only at tribal casinos, making the state one of the most restrictive jurisdictions in the country.

Attempt to Recover Residents’ Lost Money 

This is not the first legal challenge Kalshi has faced. Washington joins Massachusetts, Nevada, and Michigan in filing civil lawsuits, while Arizona has pursued criminal charges. 

So far, Nevada is the only state where Kalshi has been forced to pull certain offerings, including sports-related contracts, after a temporary restraining order.

The Washington complaint goes further than simply seeking to halt operations. It also aims to recover money lost by residents who used the platform. 

Citing the state’s Recovery of Money Lost at Gambling Act, officials argue they are entitled to reclaim funds on behalf of users, although no exact figure has been provided.

Kalshi’s business model could hinge on a legal gray area, as state law features an exception for legitimate business transactions like contracts that are tied to commodities or securities. 

The statute itself does not explicitly mention event contracts, but the wording leaves room for interpretation, which may become a key issue in court.

In addition, the lawsuit accuses Kalshi of profiting from fees on trades and operating in ways similar to bookmaking. It also claims the company unlawfully transmits gambling information online and maintains prohibited records and devices.

Looking ahead, Kalshi may try to move the case to federal court, where it could argue that federal law governs its activities. Similar efforts in other states have not yet succeeded.