A Washington state court has ordered Kalshi to stop offering most of its event-contract markets to people in the state, imposing access restrictions that will remove sports, election, political, entertainment, culture, technology, science and “mentions” contracts from Washington users.
The final order requires Kalshi to begin blocking Washington access through IP-address and residency checks by Aug. 19, then deploy a multi-source geofencing system by Sept. 2. The company is also barred from advertising the restricted markets to Washington consumers, with the court finding that marketing illegal gambling activity can constitute an unfair or deceptive practice under state law.
The ruling leaves a narrower group of Kalshi products available in Washington. Contracts related to commodities, climate, economic data and finance can continue to be offered under the order, drawing a line between markets the court treated as prohibited gambling activity and those it did not include in the restrictions.
Court extends July injunction into final order
The decision follows a preliminary injunction issued in July. Kalshi sought to pause the Washington litigation through the state appeals court, but the Washington Court of Appeals denied that request, allowing the case and the restrictions to proceed.
Washington Attorney General Nick Brown said the order covers wagers involving sports, elections, natural disasters and events connected to the Iran War. The court’s listed categories are broad enough to reach a significant share of the consumer-facing contracts that have helped prediction markets move beyond traditional financial and commodity-related questions.
Kalshi operates a platform where users buy and sell contracts linked to whether defined events will occur. A contract can settle at a fixed value if an outcome happens and at zero if it does not. Supporters characterize the products as federally regulated event contracts and tools for forecasting. State regulators and gambling authorities have increasingly argued that contracts tied to sports, elections and popular culture function as wagers, regardless of the trading-style format used to present them.
Washington’s order focuses on the activity available to state residents rather than requiring Kalshi to shut down nationally. Its geofencing deadlines show the practical enforcement mechanism state authorities are seeking: platforms must identify user location before allowing access, rather than merely asking customers to declare where they live.
A basic IP-based block must be in place first, followed by more extensive location screening. Multi-source geofencing generally combines signals such as device location, network data and account information to make it harder for a user to appear to be in another jurisdiction. The order’s inclusion of residency-based controls means a Washington address could matter alongside a user’s current internet location.
State gambling rules collide with federal derivatives oversight
The Washington case sits within a growing legal fight over which regulator has authority over event contracts. Kalshi has argued that its markets fall under the exclusive supervision of the Commodity Futures Trading Commission, the federal agency that oversees U.S. derivatives markets under the Commodity Exchange Act.
States challenging the platform have taken the opposite view. They contend that federal derivatives regulation does not displace state gambling laws when contracts are offered on sports and other event outcomes that state statutes prohibit as unlicensed wagering.
That dispute creates a difficult operating environment for platforms whose markets can be accessed across the United States. Federal registration and CFTC oversight may provide a framework for the contracts, but state-level enforcement can still determine whether particular categories are available to residents in a given jurisdiction unless courts resolve the preemption question in the companies’ favor.
The Washington order does not settle the national legal debate. It does, though, give state officials a concrete judicial precedent for seeking category-specific restrictions instead of attempting to block every product offered by a federally regulated exchange.
Its carve-out for commodities, climate, economics and finance also reflects the fault line emerging in these cases. Markets tied to crop conditions, inflation releases or interest-rate decisions more closely resemble the types of economic events associated with derivatives and hedging. Sports, elections and entertainment contracts are receiving far greater scrutiny because they overlap with familiar forms of consumer betting.
Baltimore adds pressure on Kalshi and Polymarket
Baltimore filed a lawsuit against Kalshi and Polymarket on the same day as the Washington order, alleging that the platforms’ activities amount to illegal gambling. The filing adds a municipal front to a battle that has largely involved state gambling regulators, attorneys general and federal market authorities.
Polymarket differs from Kalshi in its structure and legal history, but both platforms have become prominent venues for trading on political, sports and news-driven outcomes. Baltimore’s action indicates that local governments may pursue their own enforcement theories where they believe prediction markets bypass licensing rules, consumer safeguards or taxes applied to conventional betting operators.
The simultaneous actions also raise the prospect of a fragmented U.S. market in which access depends increasingly on geography and contract type. A Washington resident could retain access to a market tied to an inflation report or commodity price while losing access to a sports matchup or election outcome on the same platform.
For Kalshi, meeting the court’s deadlines will require more than removing a handful of markets from a public webpage. The company must prevent Washington users from entering, buying, selling or otherwise accessing the restricted contracts, while also ensuring its advertising does not promote those offerings within the state.
Washington users with existing access to affected markets should expect the platform’s location controls and product availability to change before the August and September deadlines. The order does not direct users to close positions or withdraw funds, and it does not prohibit every Kalshi contract in the state. Its immediate effect is narrower but operationally consequential: access to a large group of event-based markets must be blocked for Washington customers while the federal-versus-state authority dispute continues in court.
Curious about compliant betting alternatives? Explore Toobit’s regulated prediction markets guide for smarter, law-aware event trading strategies.
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