TheBlock
A Washington state court granted a temporary restraining order blocking Kalshi from offering sports-related prediction contracts in the state, ruling that the activity constitutes illegal gambling under Washington law.
Why it matters
Kalshi has spent the last two years winning the argument that its event contracts are swaps regulated by the CFTC, not bets governed by state gambling statutes. A federal court in Nevada agreed with that framing for Kalshi's political markets in 2024. Sports is a different fight. The market is larger, the state gambling regulators are more aggressive, and tribal gaming compacts give states a much sharper legal lever than the CFTC preemption argument ever faced.
Market impact
The order is temporary and limited to Washington, but it sets up the first real test of whether the CFTC carve-out survives contact with a state that wants sports betting revenue for itself and its tribal partners. Kalshi said it would comply with the order while pursuing its appeal. A loss at the appellate level would force Kalshi to either geo-block Washington users on sports markets or redesign those contracts to look less like wagers and more like the financial instruments the CFTC already approves.
Frequently asked questions
-
Why did the Washington court block Kalshi's sports markets?
The judge ruled that Kalshi's sports-related event contracts qualify as illegal gambling activity under Washington state law, and granted a temporary restraining order blocking them in the state.
-
Is Kalshi's political prediction market business also affected?
No. The order is limited to sports-related contracts in Washington. Kalshi's political and other event contracts, which a federal court ruled in 2024 are CFTC-regulated swaps, are not part of this ruling.
-
What is the CFTC preemption argument Kalshi relies on?
Kalshi's position is that its event contracts are financial swaps under federal CFTC jurisdiction, which should preempt state gambling laws. That argument succeeded for political markets in 2024 but has not been tested in court against sports betting.
-
Will Kalshi users in Washington still be able to trade sports contracts?
During the order, Kalshi said it will comply by blocking Washington users from its sports markets. The order is temporary and Kalshi has said it will pursue an appeal.
-
What happens if Kalshi loses the appeal?
A loss at the appellate level would force Kalshi to either geo-block Washington users on sports markets indefinitely or redesign its sports contracts to resemble financial instruments the CFTC approves rather than wagers under state law.
WuBlockchain
CryptoSlate
CoinTelegraph
WatcherGuru
CoinDesk
Crypto News