Washington sues Kalshi as states ramp up legal pressure against prediction markets
The state of Washington has become the latest to sue a prediction markets provider, after alleging Friday that Kalshi had violated state gambling laws through its products.
According to the complaint , Washington has a tightly-regulated gambling market, including a ban on online gambling, but Kalshi's products bypass these regulations.
"Kalshi’s website and app show consumers a range of events that they can bet on and the odds for those various events, which dictate how much the bettor will be paid out if the event occurs," a press release from the state said.
"This is exactly how sportsbooks and other gambling operations function.
Kalshi advertises that they allow consumers to 'bet on anything' by simply calling their service a 'prediction market' rather than 'gambling.'" The lawsuit said Kalshi's advertisements referred to "legal betting," and alleged the company's activities met state definitions of "gambling," "professional gambling," "bookmaking" and other key state provisions.
It also included a provision alleging that Kalshi's products promoted gambling addiction and targeted college students in particular.
Kalshi filed to move the case to federal court , saying it was already litigating these issues in other federal courts and that it received "no warning or dialogue" from Washington prior to the lawsuit.
"If AG [Nicholas] Brown hadn't sued us ahead of our scheduled meeting with him, he would have known better than to say we offer war markets.
We don't," Kalshi's head of communication, Elisabeth Diana, told CoinDesk in a statement.
While the Attorney General's press release referenced contracts on the Iran War, the suit itself only named a contract about when Iran's former Supreme Leader would be out of office.
"As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction.
It's very different from what state-regulated sportsbooks and casinos offer their customers.
We are confident in our legal arguments," she added.
Washington's filing continues a growing state backlash against prediction market providers.
Prediction market providers and their proponents, including Commodity Futures Trading Commission Chair Mike Selig, argue that these companies offer derivatives contracts that are appropriately regulated at the federal level.
