Kalshi blocks Washington users as court fight grows

Kalshi has blocked customers in Washington while asking a King County judge to reconsider an injunction restricting its prediction markets.

The Aug. 21 motion argues that Washington gave competing exchange North American Derivatives Exchange, operating as OG, more favorable treatment. Kalshi and OG are both designated contract markets regulated by the Commodity Futures Trading Commission.

Judge John McHale is scheduled to consider Kalshi’s request on Sept. 2 without oral argument. The existing restrictions remain active while that request is pending.

Kalshi implemented Washington geofencing

The amended preliminary injunction required Kalshi to install IP address and residency-based controls by Aug. 19. A broader GeoComply system using multiple location sources must be operational by Sept. 2.

Kalshi could face a $120,000 daily penalty for failing to meet the second deadline unless it submits a sworn explanation for any delay. The company told the court it had already blocked Washington customers.

The order covers contracts linked to sports, elections, politics, entertainment, culture, technology and science, along with certain “mentions” markets. Record-preservation requirements also remain in place.

Washington Attorney General Nick Brown argues that those products amount to unlicensed gambling. As crypto.news previously reported, the Washington court rejected Kalshi’s initial jurisdiction argument and found the state was likely to succeed at the preliminary stage.

That finding is not a final judgment on every claim. Kalshi continues to argue that the federal Commodity Exchange Act gives the CFTC exclusive authority over contracts listed by registered exchanges.

Kalshi cites different treatment for OG

Kalshi’s reconsideration request relies on an Aug. 18 agreement between Washington officials and OG. Under that agreement, the state will not pursue civil or criminal enforcement involving OG’s federally traded event contracts until related appeals are resolved.

“The very event contracts that the state deemed intolerable from Kalshi are now freely available” through a competitor, Kalshi argued. The court has not accepted that characterization.

Kalshi says the agreement undermines Washington’s earlier claim that continued trading creates immediate consumer harm. It wants McHale to vacate parts of the injunction or provide a stay comparable to OG’s arrangement.

The company describes OG as “identically situated.” That remains Kalshi’s legal position rather than an established court finding. Washington may argue that procedural history or negotiated terms distinguish the two cases.

Michigan and Nevada restrictions remain active

Washington joins Michigan and Nevada among states currently restricting Kalshi. Courts in those jurisdictions have ordered location controls while state authorities pursue claims involving unlicensed sports wagering.

Kalshi has appealed or challenged those orders. Its central argument remains that federally regulated event contracts are derivatives, meaning state gambling laws cannot control their listing or trading.

Courts have not adopted one national answer. In contrast to Washington, a federal judge blocked Minnesota’s prediction-market prohibition after finding registered exchanges were likely to succeed on part of their preemption argument.

New York, Connecticut, Massachusetts, Ohio, Maryland, Utah and Arizona are also involved in pending disputes concerning prediction-market authority. The outcomes may depend on contract type, statutory wording and the procedural stage of each case.

CFTC prepares prediction-market safeguards

CFTC Chairman Michael Selig said on Aug. 20 that the agency would continue defending its claimed exclusive jurisdiction over federally regulated event contracts.

He also acknowledged concerns about retail protections. In official remarks, Selig said the commission would soon propose amendments to Parts 38 and 40 of its regulations.

The proposals are expected to address consumer protection, product governance, market design, listing standards and incentive programs. The CFTC has already proposed changes explaining how it could assess contracts involving gaming, war, terrorism, assassination or illegal activity.

Selig said the amendments would arrive “soon,” but the CFTC has not published their complete text or a formal release date.

Proposed regulations must still pass through the federal rulemaking process. They will not automatically reverse state court orders or resolve whether federal law displaces state gambling restrictions.

The next immediate events are Kalshi’s Sept. 2 reconsideration decision and geofencing deadline. Until a court grants relief, Washington customers will remain unable to access the restricted markets.