Washington judge blocks Kalshi, rejects federal preemption defense
A Washington state judge granted the state's motion for a preliminary injunction against Kalshi on Monday, blocking the prediction market platform's sports prediction markets statewide. The court ruled that Kalshi's event contracts constitute illegal gambling activities under state law. The court rejected Commodity Exchange Act preemption arguments. The parties have until August 3 to propose the injunction's specific terms.
Kalshi's federal preemption strategy is now bleeding on multiple fronts. The Washington ruling means the platform must defend yet another market individually instead of winning once federally. For traders, positions they thought were protected by CFTC registration face sudden voiding by state courts. The August 3 deadline to propose injunction terms forces Kalshi's legal team to allocate firepower across Washington, New York, Michigan, and Illinois simultaneously.
Each state victory invites copycat actions, multiplying legal budgets and forcing geofencing decisions that shrink addressable market. The Second Circuit appeal remains the last forum where Kalshi can argue for uniform federal protection, but that court may not rule before more states follow Washington's lead. For Polymarket, the identical legal exposure means the appellate outcome is a shared survival event.