Washington Judge Rejects Kalshi’s Federal Preemption Defense, Grants Preliminary Injunction

A Washington state judge has granted a preliminary injunction against prediction market operator Kalshi, rejecting the company’s argument that federal commodities law preempts state gambling regulations. The court concluded that Washington is likely to prevail on its claims and plans to finalize the scope of restrictions on the platform in August.

Ruling Finds State Law Likely Controls

In the decision, the judge determined that Kalshi’s federal registration does not displace Washington’s gambling laws. The court found the state is likely to prove that Kalshi’s event contracts fall within its regulatory purview, clearing the way for temporary restrictions while the case proceeds.

Preemption Argument Rejected

Kalshi argued that its federal oversight under U.S. commodities law should shield it from state-level gambling enforcement. The court disagreed, indicating that federal commodities regulation does not automatically preempt state gambling statutes. As a result, Washington can press its claims that certain event-based markets constitute illegal gambling under state law.

Next Steps and Timeline

While the preliminary injunction is in place, the judge said the precise contours of the restrictions on Kalshi’s operations will be finalized in August. Until then, the company faces interim limits in Washington as the litigation continues.

Why It Matters

The ruling underscores the tension between federal commodities oversight and state gambling enforcement for event-based markets. It also signals that state authorities may continue to assert jurisdiction over prediction platforms, even when those platforms hold federal registrations. The outcome could influence how prediction markets operate across jurisdictions and how companies structure offerings to comply with both state and federal rules.