Washington AG Sues KalshiEx for Illegal Gambling Under State Law, March 2026

On March 27, 2026, Washington State Attorney General Nick Brown filed a civil lawsuit against KalshiEx LLC (Kalshi) in Washington state court. The complaint alleges that Kalshi operates an online betting platform in violation of the Washington State Gambling Act, RCW Chapter 9.46, and the Washington Consumer Protection Act, RCW Chapter 19.86. The action is at the enforcement stage; no judgment has yet been entered. The AG seeks an injunction to halt Kalshi's operations in Washington, disgorgement of money lost by Washington residents, and civil penalties under the Consumer Protection Act.

The controlling statute is the Washington State Gambling Act, RCW Chapter 9.46. Section 9.46.0237 defines "gambling" as "staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person's control or influence, upon an agreement or understanding that the person or someone else will receive something of value in the event of a certain outcome." The AG's complaint asserts that each Kalshi contract — whether tied to sports outcomes, election results, or other events — satisfies every element of this definition. The Legislature amended the Gambling Act in 2006 to make clear that internet gambling falls within the prohibition. The complaint additionally relies on RCW 9.46.240, which bars conducting or participating in unlawful gambling.

Online prediction market operators, sports-event contract platforms, and financial event contract exchanges that accept Washington State residents must treat this filing as a direct challenge to the "prediction market" characterization. The AG's theory treats spread bets, over/under bets, and proposition contracts offered by Kalshi as functionally identical to products offered by sportsbooks — all prohibited under state law. Platforms that have marketed contracts to Washington residents, accepted fees or charges on those contracts, or recruited Washington-based users face potential exposure to injunctive relief, restitution, and civil penalties up to $7,500 per Consumer Protection Act violation.

The filing raises a split between state gambling law and federal regulatory treatment. Kalshi holds designation as a Designated Contract Market (DCM) under the Commodity Exchange Act and is regulated by the U.S. Commodity Futures Trading Commission (CFTC). The complaint does not engage with federal preemption directly, but that defense is expected to be litigated. The CFTC has previously authorized Kalshi's event contracts following an appellate ruling in Kalshi's favor in KalshiEx LLC v. CFTC (D.C. Cir. 2024). The tension between state gambling prohibitions and federal derivatives law remains the central open legal question in this action.

Our firm advises on regulatory compliance and enforcement matters affecting prediction market operators, online gaming platforms, financial event contract exchanges, and related businesses. We have dedicated partnership networks to assist clients with multi-jurisdictional exposure. We welcome inquiries from operators, investors, and service providers seeking guidance on this developing area of law. Our work in this space includes: prediction market licensing and compliance, state gambling law analysis, CFTC DCM and SEF registration, online gaming regulatory counsel, fintech regulatory strategy, and enforcement defense.

Source: Attorney General of Washington, Press Release — "Washington sues online betting platform Kalshi for illegal gambling," dated March 27, 2026. Official URL: https://www.atg.wa.gov/news/news-releases/washington-sues-online-betting-platform-kalshi-illegal-gambling. Confirmed April 6, 2026.

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