Kalshi must geofence Washington, remove most of contracts

• Kalshi must sharply scale back its Washington state operations after King County Superior Court Judge John McHale found the platform likely violates state gambling laws.
• Kalshi must implement initial geofencing by Aug. 19 and a full multi–source system by Sept. 2, or face $120,000 daily fines.
• Washington Attorney General Nick Brown sued Kalshi in March, arguing its event contracts amount to illegal gambling.

Kalshi must sharply scale back its Washington state operations after King County Superior Court Judge John McHale found the prediction market operator likely violates state gambling laws.

McHale’s order bars Kalshi from offering sports, election, politics, entertainment, culture, technology, science and “mentions” contracts to Washington residents. Commodities, climate, economics and finance markets can continue.

Geofencing deadlines loom

Kalshi must implement an initial IP address and residency–based geofence by Aug. 19, followed by a more comprehensive multi-source system by Sept. 2. Missing the Sept. 2 deadline risks fines of $120,000 a day, though Kalshi can file an affidavit explaining any delay for the court to weigh.

That figure mirrors the penalty Nevada regulators are separately pursuing against Kalshi in a Nevada contempt motion, making Washington the second state to threaten that scale of daily fine.

McHale’s order also bars Kalshi from advertising or marketing restricted contracts to Washington consumers. Existing account holders can still close positions and withdraw funds as the geofencing rolls out.

The judge wrote that “Kalshi operates an online betting platform,” concluding the company likely breaches multiple provisions of the Washington Gambling Act. He also cited gambling-addiction risk as part of his reasoning.

Pattern of defiance

Washington Attorney General Nick Brown sued Kalshi in the March lawsuit, arguing its event contracts function as gambling despite being structured as financial products. Brown’s office says Kalshi ignored a December 2025 notice from the Washington State Gambling Commission stating that event-based contracts were not authorized in the state.

Nick Brown, Washington Attorney General, said:

“Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more. As this case moves forward, we will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”

Kalshi has appealed the injunction and says it is weighing further legal action. Jacki McGavick, Kalshi spokesperson, said:

“The CFTC has exclusive jurisdiction over our exchange. We respectfully disagree with the court’s decision and are considering all legal options.”

Federal fight intensifies

The Washington ruling adds to mounting legal pressure on Kalshi, which already faces court-ordered restrictions in Nevada geofencing territory and in Michigan sports bets, alongside active cases in New York and Massachusetts.

Kalshi’s central defense across these disputes rests on the Commodity Futures Trading Commission’s federal preemption argument. The regulator pressed that same position when it invoked emergency authority in Kalshi’s separate New York case this month.

Michael S. Selig, CFTC Chair, said:

“Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. These are financial exchanges that offer financial instruments and operate across state lines.”

Courts in Nevada and Michigan have similarly rejected Kalshi’s federal preemption arguments, and McHale followed that pattern in Washington.

The Washington case now moves toward trial, with Brown also seeking to recover funds lost by state bettors and additional civil penalties.

Each state ruling against Kalshi’s federal-jurisdiction defense narrows its options and adds weight to calls for the CFTC to resolve the underlying question nationally rather than case by case.