A Washington state judge has ordered prediction market platform Kalshi to stop offering a wide set of event-based contracts to people in the state, handing Washington regulators an early win in a dispute over whether the company’s market listings are allowed under state law.

The ruling rejects Kalshi’s argument, at this stage of the case, that federal commodities law overrides Washington gambling law. Contracts tied to sports, elections, politics, entertainment, culture, tech and science, and “mentions” are covered by the order, while contracts involving commodities, climate, economics and finance are excluded.

Preliminary injunction sets product limits

The amended order was signed on Wednesday and lays out the terms of a preliminary injunction that Judge McHale had granted in July. Under that order, Kalshi is barred from offering the covered categories of contracts to Washington users while the case continues.

The court said Washington had shown a likelihood of success on claims brought under three state laws. In the same ruling, the judge found that the Commodity Exchange Act does not preempt Washington gambling law, a key point in the state’s challenge to Kalshi’s operations.

Geofencing deadlines arrive in stages

The order also imposes technical compliance deadlines. Kalshi must put in place IP-address and residency-based geofencing by Aug. 19 to stop people in Washington from purchasing contracts covered by the injunction.

A second deadline follows on Sept. 2, when Kalshi must implement a GeoComply multi-source geofencing system. The purpose of the requirement is to prevent Washington residents from accessing the restricted contracts through the platform.

State frames case as illegal gambling dispute

Washington Attorney General Nick Brown said on Thursday that the state was “holding Kalshi accountable for running an illegal gambling operation,” referring to the recent court ruling in a post on X.

That statement reflects the state’s position in the case. The court order itself does not end the litigation, but it does give Washington temporary relief while the broader legal dispute moves forward.

Kalshi’s position and the next step

Kalshi has continued to argue that the Commodity Futures Trading Commission has exclusive jurisdiction over its exchange. That claim is central to the company’s effort to keep its event-contract markets available despite state-level objections.

For now, the immediate next confirmed steps are the compliance deadlines in August and September. Kalshi also sought to pause the injunction, but the Washington Court of Appeals denied its request for a stay, leaving the restrictions in place as the case proceeds.

Source: cointelegraph.com