Washington State Attorney General Nick Brown has initiated legal action against the prediction market platform Kalshi, claiming that the platform operates as an illegal online gambling service, contravening state regulations.
The civil lawsuit, lodged in King County Superior Court, aims to halt Kalshi’s operations within Washington, recover financial losses for state residents, and impose civil fines, according to the filed complaint.
Brown contends that Kalshi’s depiction as a “prediction market” conceals what is essentially a gambling platform, accusing the firm of attempting to “financialize everything.”
“Kalshi is merely a bookie with a sophisticated branding, bolstered by substantial venture capital,” Brown stated. “They commend themselves publicly for their clever circumvention of Washington’s gambling statutes, but it’s more than just cleverness. It’s a deception, and it’s unlawful.”
The lawsuit asserts that Kalshi provides sportsbook-like offerings, including spread bets, over/under bets, and parlays, despite online gambling being largely prohibited in Washington except for in-person betting at tribal casinos.
State attorneys referenced Kalshi’s own promotional materials, which include claims that users could “bet on the NFL in all 50 states” and “bet on everything,” along with an ad stating customers had “discovered a way to bet on the NFL while residing in Washington.”
Founded in 2018, Kalshi positions itself as “an exchange dedicated to trading on the outcomes of future events” and is regulated by the Commodity Futures Trading Commission as a prediction market. The company claims that federal regulation overrides state gambling laws.
The complaint highlights that Kalshi permits users to “trade”—or “bet,” from the state’s perspective—on a wide array of outcomes, including sports events, elections, weather phenomena, public policy matters, and cultural events. It also mentions unique offerings such as “mention markets,” where users place wagers on specific words used during broadcasts, as pointed out in the complaint.
Brown expressed concern that the platform enables gambling on sensitive subjects, raising significant societal issues.
“Should we embrace a culture where everything is treated as gambling?” he inquired. “Do we want to become a society that transitions from being concerned about the human toll of war to betting on its specifics?”
The legal action also questions Kalshi’s business model, alleging that the firm employs an affiliate, Kalshi Trading LLC, to engage in gambling transactions.
“In essence, Kalshi functions similarly to the house in a conventional gambling scheme,” the complaint asserts.
Elisabeth Diana, the communications head of the company, challenged Brown’s portrayal of Kalshi’s services and mentioned that the AG proceeded with the lawsuit prior to a planned discussion with the firm.
“If AG Brown hadn’t filed the lawsuit before our scheduled meeting, he would have been aware that we do not offer war markets. We don’t,” Diana stated. She added that “as acknowledged by other courts, Kalshi is a regulated exchange operating nationwide for real-world events, falling under exclusive federal jurisdiction. This is distinctly different from what state-licensed sportsbooks and casinos provide to their clientele. We are confident in our legal standing.”
This case is part of a larger trend of heightened scrutiny. Arizona has filed criminal charges against Kalshi, and Nevada has also taken legal action against the firm. Kalshi is currently facing over 20 civil lawsuits, as noted in the complaint.
The emergence of prediction markets has garnered support from the Trump administration. Mike Selig, chair of the CFTC, has referred to such platforms as “exciting products” and cautioned: “To those challenging our authority in this domain, let it be clear: we will see you in court.”
Concurrently, legislators are considering imposing new limitations. A bipartisan proposal by U.S. Senators Adam Schiff and John Curtis aims to prohibit sports betting on prediction market platforms.
Washington is known for having some of the most stringent gambling laws in the nation, with online gambling banned since 2006 and sports betting allowed only at tribal casinos in person.