Kalshi legal woes grow with Washington state gambling suit

Kalshi just got hit with another lawsuit — this time from Washington state. The AG dropped the hammer on Friday, accusing the prediction market of straight-up violating state gambling laws. Washington's rules are some of the tightest in the US, and they're not playing around.

The complaint cites Washington's ban on online gambling and claims Kalshi violated the Consumer Protection Act, Gambling Act, and Recovery of Money Lost at Gambling Act. AG Nick Brown called it out: "Kalshi advertises that they allow consumers to 'bet on anything' by simply calling their service a 'prediction market' rather than 'gambling.'" Oof.

Washington law defines gambling as "staking or risking something of value upon the outcome of a contest of chance or a future contingent event" — and the AG says Kalshi's bets fit that definition perfectly. "Each Kalshi bet risks money, relies in part on chance, and promises a payout to winners."

Kalshi immediately tried to move the case to federal court, arguing these issues are already being litigated elsewhere and claiming there was "no warning or dialogue" from Washington before the lawsuit dropped.

This isn't Kalshi's first rodeo. A Nevada judge just blocked them from operating in the state earlier this month, siding with the Gaming Control Board. Kalshi argued their contracts are under the CFTC's jurisdiction — but the state wasn't having it.

Days before that, Arizona AG Kris Mayes announced criminal charges against Kalshi, alleging they ran an "illegal gambling business in Arizona without a license" and offered illegal election wagering. Arizona was one of the first to go criminal with it.

While Kalshi faces similar cases in multiple states over offering sports gambling without licenses, the heat is turning up. Lawmakers are also scrutinizing prediction markets for offering bets on US military actions — citing concerns about insider government info.