- Washington won a preliminary injunction against Kalshi in a King County Superior Court order filed July 20.
- The order holds the Commodity Exchange Act does not preempt Washington gambling law on express, field or conflict grounds.
- It reads federal law to allow event contracts to be listed in some states and not in others.
- Kalshi must preserve Washington geolocation and marketing data now, with the full injunction due by Aug. 5.
SEATTLE – Federal commodities law does not shield Kalshi from Washington’s gambling statutes, King County Superior Court Judge John F. McHale ruled in an order filed July 20 that hands the state a preliminary injunction against the prediction market. The ruling rejects the federal defense at the center of Kalshi’s case.
Preemption Fails On Express, Field And Conflict Grounds
McHale signed the order July 17, three days before the clerk entered it, in State of Washington v. KalshiEX LLC, No. 26-2-10264-3 SEA. The court heard oral argument July 10.
“The Commodity Exchange Act (CEA) does not preempt Washington State gambling law,” the order states.
On express preemption, McHale found that 7 U.S.C. 2(a)(1)(A) “does not contain express preemption language.” The provision’s grant of exclusive jurisdiction to the Commodity Futures Trading Commission was written to “separate the functions of the [CFTC] from those of the [SEC] and other regulatory agencies,” the order says, quoting the 1982 Supreme Court decision Merrill Lynch, Pierce, Fenner & Smith Inc. v. Curran.
The same section carries savings clauses preserving the jurisdiction of “other regulatory authorities under the laws of the United States or of any State” and of state courts.
On field preemption, the order draws a narrow line. The CEA preempts the field of regulating conduct on designated contract markets, but it does not preempt Washington’s enforcement of its gambling code at Chapter 9.46 of the Revised Code of Washington. On conflict preemption, McHale wrote that “complying with Washington law would not prevent Kalshi from complying with applicable Federal law.”
The CEA’s Own Gaming Rule Cuts Against Kalshi
The order then turns the CFTC’s own event-contract provisions against the company invoking them. Under 7 U.S.C. 7a-2(c)(5)(C)(i)(I), the special rule for reviewing event contracts, the commission may find such contracts contrary to the public interest when they involve terrorism, assassination, war, gaming, or “activity that is unlawful under any Federal or State law.”
McHale read that last clause as proof that Congress left the definition of unlawful conduct to the states. The reference to activity unlawful under state law, the order says, shows that states retain the authority to decide what is unlawful under their own statutes, and the CFTC may then decide whether that activity is contrary to the public interest. The order goes further: “certain types of contracts and transactions may be allowed in some states and not in others.”
A footnote anchors the point in the commission’s own regulation, 17 C.F.R. 40.11(a)(1), which bars a registered entity from listing contracts referencing gaming or activity unlawful under any state or federal law. That reading cuts against the uniform national market Kalshi and other prediction market apps have argued the CEA guarantees.
Impartial Access Does Not Require Breaking State Law
The court also rejected Kalshi’s operational defense. The company argued that the CFTC’s impartial access rule at 17 C.F.R. 38.151(b) obliges a designated contract market to serve all comers, so geofencing Washington would put it in breach of federal law.
McHale called the rule a non-discrimination provision, requiring access criteria that are “impartial, transparent, and applied in a non-discriminatory manner” and comparable fee structures. “An anticipated inability to match Washington traders with other traders nationwide is not discrimination in providing access on the part of Kalshi,” the order says, adding that the rule “does not require Kalshi to violate state law.”
The court also found Kalshi’s contracts are not “bona fide business transactions valid under the law of contracts for the purchase or sale at a future date of securities or commodities,” the statutory carve-out that would have exempted the platform from Washington’s Gambling Act.
A Commission Notice, And An Ad Naming The State
The findings describe a company that kept operating after the state told it to stop. The Washington State Gambling Commission issued a notice on Dec. 9, 2025 stating that “offering events-based contracts or participating in these markets is not authorized in Washington State.” Kalshi “has willfully ignored” it, the order says, and continues to offer betting and to advertise in the state.
The court cited an advertisement telling consumers they could “bet on the NFL even though [they] live in Washington.” Kalshi, a Delaware company based in New York and a wholly owned subsidiary of Kalshi, Inc., is neither licensed by the commission nor registered to do business in Washington.
The state effectively banned online gambling in 2006 and in 2020 authorized only sports wagering on tribal lands under compact, so Washington permits legal sports betting only on tribal lands and not through online apps. Kalshi has opposed state oversight elsewhere and is already subject to a preliminary injunction in Nevada, where the state has since moved to hold Kalshi in contempt.
Consumer Harm Outweighed Compliance Costs
McHale wrote that he weighed Kalshi’s compliance costs and lost profits, then found that “the public interests at stake and potential harm to consumers in the continued operation of Kalshi’s online gambling activities in the State of Washington outweigh harm to Kalshi.”
The harm finding rests in part on state prevalence data. The 2021 Washington State Adult Problem Gambling Prevalence Study, a Health Care Authority report to the Legislature, found that 10.3% of Washington residents who gambled online screened at moderate-to-severe risk for problem gambling, three times the 3.5% rate among all gamblers. The same study found that 11.5% of gamblers reported betting online in the prior 12 months even though the practice is illegal in the state.
Citing civil rule 65(c) and RCW 4.92.080, the order required no security or bond from the state.
Terms Due Aug. 3, Full Order Expected Aug. 5
One directive took effect with the order. Kalshi must preserve all records relating to Washington consumers and to any event contracts available in the state, including “logs, communications, geolocation/location determinations, and marketing/targeting data,” until the court says otherwise.
The remaining terms are unwritten. McHale said he would have issued the full directives sought by the state, but Kalshi’s counsel asked to confer with the attorney general’s office on the language and scope first. The parties are to file agreed terms, or competing proposals with supporting briefing, by noon on Aug. 3. The court intends to rule without oral argument and to enter the complete preliminary injunction by Aug. 5.
