Washington State Attorney General Nick Brown filed a civil lawsuit against Kalshi on Friday, accusing the prediction market platform of operating illegal gambling in violation of Washington's Gambling Act and Consumer Protection Act.

The lawsuit alleges Kalshi's markets — which let users bet on sports outcomes, elections, Supreme Court decisions, and even the number of measles cases this year — constitute gambling under state law. Brown cited a particularly damaging Kalshi advertisement where one person texts another that they "found a way to bet on the NFL even though we live in Washington," which the AG argued shows the company knowingly circumvented state gambling restrictions.

Third State, Same Argument

Washington's suit adds to a growing pile of legal actions targeting Kalshi. Nevada issued a temporary restraining order in March, barring the company from operating without a gaming license. Arizona filed the first criminal charges against Kalshi earlier in March. On Thursday, California Governor Gavin Newsom signed an executive order banning state officials from trading on prediction markets using inside information — a softer but pointed rebuke.

The central legal question in all these cases is jurisdictional. Kalshi argues it is a federally regulated exchange operating under CFTC oversight, which preempts state gambling laws. States counter that betting on NFL games, regardless of branding, is gambling — and they regulate gambling.

The Stakes

Kalshi raised over $1 billion at a $22 billion valuation last year. NYSE parent company ICE has committed nearly $2 billion to competitor Polymarket. The multi-state legal offensive could force federal clarification on whether CFTC-licensed prediction markets are gambling or financial instruments — a question with major implications for the sector's future.

The Washington suit seeks to halt Kalshi's operations in the state, recover losses from Washington residents, and impose civil penalties.