Washington State Attorney General sues Kalshi

Charlotte Capewell

30 March 2026 at 7:50am UTC-4

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Washington Attorney General Nick Brown has sued Kalshi, alleging the company is operating in violation of state gambling laws.

The complaint, filed in King County Superior Court, claims Kalshi is in violation of Washington law, which bans most forms of gambling outside of sports betting conducted on tribal lands.

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Brown is asking for an injunction to immediately block the company’s operations in the state.

“For the past few years, the online gambling company Kalshi has allowed people to bet on almost every aspect of our lives. Sports, elections, the length of presidential press conferences,” Brown said during a press conference Friday. “And the company takes in huge sums of money from Washingtonians. And when it does that, it violates Washington state law.”

According to the lawsuit, Kalshi has allowed users in Washington to place wagers on a wide range of events, including sports outcomes, political races, and other real-world developments. The Attorney General’s Office alleges that the platform is essentially offering unlicensed gambling.

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Kalshi, which launched in 2021, describes itself as a federally regulated prediction market, but state officials say it functions like a sportsbook. The lawsuit states that more than 90% of activity on the platform is tied to sports-related contracts.

The filing also highlights specific betting activity involving Washington events, including college basketball games and local political races. The Attorney General’s Office also said it will assess financial activity tied to Washington users as part of the case and may seek damages.

The lawsuit follows similar cases in other states, most recently in Arizona, where the Attorney General filed criminal charges against the platform.

Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.

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The Backstory

Mounting scrutiny of Kalshi’s model

Washington’s lawsuit lands amid a widening, state-by-state push to define where event-based trading ends and sports betting begins. Attorneys general in other jurisdictions have already moved to test that line in court. In Massachusetts, Attorney General Andrea Joy Campbell sued Kalshi in Suffolk Superior Court, arguing the platform’s moneyline, spread and over/under “event contracts” function like unlicensed sports bets and allow 18- to 20-year-olds to wager in violation of state rules. Her office paired the case with a public-health frame, pointing to gaps in deposit limits and player protections and to the state’s broader youth risk agenda. For details, see the state’s filed complaint and Campbell’s earlier public-private initiative, the Youth Sports Betting Safety Coalition. A summary of the Massachusetts action is here: Massachusetts Attorney General sues Kalshi for illegal sports wagering operations.

Michigan followed, with Attorney General Dana Nessel filing in Ingham County to block Kalshi outright as an unlicensed sportsbook under the Lawful Sports Betting Act. The state underscored that only licensed commercial and tribal casinos can offer sports wagering and said Kalshi falls outside that regime. Read the coverage: Michigan Attorney General sues Kalshi over legality of prediction markets, and the state’s complaint filing.

Kalshi, which launched in 2021 under federal Commodity Futures Trading Commission oversight, maintains it operates a regulated prediction market for event contracts. But as more of its volume centers on sports-linked outcomes, state attorneys general have treated the activity as betting that must run through their licensing, tax and consumer-protection systems. Washington joins that chorus, seeking an injunction to stop in-state activity and signaling potential damages tied to local users.

Federal-regulated market meets state gambling law

At the heart of these cases is a jurisdictional clash: federal commodities oversight versus state gambling codes. Massachusetts and Michigan both argue that labeling trades as “yes/no” event contracts does not change the fact that the products mirror sports wagers offered by licensed operators, with the same incentives and risks. The Massachusetts complaint also points to Kalshi’s marketing channels, including social media and brokerage integrations, as evidence of mass-market promotion without state authorization. Washington now echoes that theme by highlighting a concentration of sports-related contracts and by citing wagers tied to local events as proof the platform reaches residents where state law applies.

The states are also pressing a consumer angle. Massachusetts asserts Kalshi bypasses age floors and responsible-gaming tools expected of licensees. That tack resonates with regulators nationally who want uniform safeguards regardless of product label. The policy implication is clear: if a contract’s economic substance is indistinguishable from betting, then state rules on age gating, limits, self-exclusion and tax compliance should attach.

Beyond prediction markets: a wider gray-market cleanup

The Kalshi actions run in parallel with a broader campaign against unregulated or quasi-legal online gambling products. In New York, Attorney General Letitia James moved against so-called sweepstakes casinos, sending cease-and-desist letters to 26 operators that sell virtual coins exchangeable for prizes, arguing the model violates state law against online casino gambling that risks money for monetary value. See: New York Attorney General halts 26 sweepstakes operations in the state. Her office’s position is detailed in an official release: Attorney General James stops illegal online sweepstakes casinos. State Sen. Joseph Addabbo has also advanced a bill to ban such operations outright, underscoring the legislative follow-through at play; the measure is posted here: SB S5935A.

California is weighing a separate but related question: whether popular daily fantasy sports formats constitute illegal gambling. Multiple operators have long argued that paid fantasy contests are games of skill. Tribal governments and some lawmakers contend the games cross into wagering under state law. As attention builds, reporting indicates the attorney general could soon issue an opinion that reshapes the market. Read more: California Attorney General set to rule that online fantasy sports platforms are illegal, and the initial report from KCRA: online fantasy sports platforms in California.

Consumer protection rises to the fore

Attorneys general are increasingly pairing enforcement with education. In Illinois, as March Madness kicked off, Attorney General Kwame Raoul urged residents to verify they are using licensed operators and to safeguard personal and financial information, a nod to the risks of off-book sites that look legitimate but fall outside regulatory guardrails. Coverage here: Illinois Attorney General urges bettors to be responsible during March Madness. The messaging tracks with Massachusetts’ focus on underage access and responsible gaming tools in its Kalshi suit and with New York’s rationale for pulling down sweepstakes casinos that can blur lines for consumers.

That consumer frame matters in court. States are not only asserting jurisdiction over economic activity but arguing that unlicensed platforms externalize harms onto users who lack recourse if disputes arise, funds are frozen or game integrity is questioned. By tying litigation to addiction risks, financial exposure and the absence of state-mandated safeguards, attorneys general bolster the case for injunctions while seeking to minimize political blowback for curbing innovative but loosely regulated products.

What’s next as jurisdictions test the line

Washington’s suit adds to a patchwork of cases that could produce divergent rulings on whether prediction markets offering sports-related contracts are, in substance, sportsbooks. If courts side with the states, platforms may face a choice: geofence and seek licenses where possible, strip out sports inventory, or tilt back to non-sports contracts that regulators view as closer to information markets than wagering. If courts credit federal oversight as sufficient, states may push legislators to clarify definitions and explicitly capture event contracts that mirror betting.

Watch for three near-term signals. First, preliminary injunction decisions in Massachusetts, Michigan and Washington will indicate how judges weigh public-interest harms and the likelihood of state success on the merits. Second, any movement by lawmakers, such as New York’s sweepstakes bill, could provide statutory clarity faster than litigation. Third, California’s anticipated opinion on fantasy sports will influence how platforms categorize skill versus chance in the nation’s largest market, with spillover effects for how other states parse event-based products.

The stakes are significant. For platforms, the path to legitimacy likely runs through state licensing, taxes and robust consumer protections. For states, the challenge is to police gray zones without stifling financial innovation that may have socially useful applications beyond sports. Washington’s case underscores that, for now, state gambling laws remain the gatekeepers when online markets start to look like bets.