Washington judge blocks Kalshi, rejects federal preemption for second time
A King County Superior Court judge granted Washington state's preliminary injunction against Kalshi on July 20, ruling the platform likely violates state gambling laws. Judge John McHale rejected Kalshi's argument that federal commodities law preempts state rules, halting its operations in Washington pending further proceedings. McHale said he would issue the injunction order by August 5, allowing time for Kalshi to respond.
Kalshi must now defend its business market by market against judges who treat CFTC registration as irrelevant. Washington's ruling joins Michigan and New York in stripping Kalshi of a federal shield, forcing the platform to geofence state by state or fight parallel suits. Traders who bought contracts under the assumption of federal backing face sudden voiding risk where state courts act.
The platform is appealing the Washington injunction and asking to keep operating during that appeal, but each additional state loss raises the cost of national expansion. Polymarket holds the identical CFTC registration and faces the identical exposure; every state playbook tested on Kalshi previews its own defenses. The only venue with power to restore a single federal standard is the Second Circuit, where Kalshi's New York appeal already sits.