Major prediction platform Kalshi is facing a severe crackdown in Washington state as legal pressures mount nationwide against online event-contract exchanges.

A King County Superior Court judge has ordered KalshiEX to halt a significant portion of its operations in Washington. The court ruled that the company violated both the state Gambling Act and the Consumer Protection Act by operating an unlicensed gambling platform.

While Kalshi operates nationally as a federally registered financial exchange, state regulators argue it functions as a deceptive sportsbook.

Under the ruling, Kalshi must cease offering, facilitating, or advertising wagers on sports events and traditional athletic contests; elections and political outcomes; entertainment, tech, science, and cultural milestones; and wagers on whether public figures will utter specific words, which state officials noted are unusually vulnerable to insider manipulation.

The injunction reinforces Washington’s long-standing prohibition on internet gambling, enacted in 2006. State law defines illegal gambling as risking value on a contest of chance or contingent future event — a framework the judge agreed applies to Kalshi’s odds-based payouts.

“Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more,” Washington Attorney General Nick Brown said. “Under this order, Kalshi is banned from offering wagers on most of those topics in Washington.”

The Washington Court of Appeals denied Kalshi’s request to stay the injunction, leaving strict technical compliance requirements in place.

The Washington enforcement action reflects a broader national conflict between municipal authorities, state regulators, and federal prediction markets.

Baltimore recently filed lawsuits against both Kalshi and competitor Polymarket. The suit alleges the platforms offer unlicensed sports wagering, allowing them to bypass crucial local oversight, taxation, and mandatory responsible-gambling safeguards.

The legal battle highlights a significant grey regulatory area: Prediction platforms argue they fall under exclusive federal authority, while states classify them as illegal bookmaking.

Operated in all 50 states with an entry age of 18 — compared to the traditional 21-plus limit for standard sportsbooks — these markets offer lower barriers to entry.

Following disappointing Q2 earnings driven by falling sportsbook revenue, major operators like DraftKings and FanDuel are increasingly looking toward prediction-market models to access un-legalized jurisdictions.

With aggressive marketing across mainstream media and growing consumer protection risks, including addiction and financial loss among young bettors, experts indicate the systemic tension between state gambling laws and federal prediction trading will likely persist until addressed by the U.S. Supreme Court.