Kalshi legal woes grow with Washington state gambling suit

Kalshi is facing another state-level lawsuit after the state of Washington on Friday filed allegations that the prediction market operator violated state gambling laws with its products.

The Washington Attorney General’s complaint cites the Pacific Northwest state’s existing ban on online gambling and otherwise strict oversight of the gaming market, in claiming Kalshi violated the Washington Consumer Protection Act, Gambling Act, and Recovery of Money Lost at Gambling Act.

"Kalshi’s website and app show consumers a range of events that they can bet on and the odds for those various events, which dictate how much the bettor will be paid out if the event occurs," an announcement from Attorney General Nick Brown said. "This is exactly how sportsbooks and other gambling operations function. Kalshi advertises that they allow consumers to 'bet on anything' by simply calling their service a 'prediction market' rather than 'gambling.'"

The definition of gambling under Washington law is “staking or risking something of value upon the outcome of a contest of chance or a future contingent event,” and Kalshi’s activities fall squarely within that definition, the AG’s announcement said. “Each Kalshi bet risks money, relies in part on chance, and promises a payout to winners.”

Kalshi immediately sought to move the case to federal court, saying in its filing that the issues raised by the Washington suit are already being  litigated in other federal courts and that there had been "no warning or dialogue" from Washington state  prior to the lawsuit.

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State AGs and gaming regulators mount legal fights across the country

A Nevada judge earlier this month temporarily blocked Kalshi from operating in the state, finding that state authorities are reasonably likely to prevail in a legal fight over whether the company’s event contracts violate Nevada gambling laws.

Carson City District Court Judge Jason Woodbury issued a temporary restraining order on Friday, siding with a Nevada Gaming Control Board motion to block Kalshi from operating in the state for 14 days.

Kalshi had argued that its contracts are under the exclusive jurisdiction of the US Commodity Futures Trading Commission, an agency that has backed prediction markets that are fighting in multiple state courts over accusations of offering illegal gambling.

Days earlier, Arizona Attorney General Kris Mayes announced charges against the companies behind Kalshi, alleging that the company operated an “illegal gambling business in Arizona without a license” and offered illegal election wagering.

While Kalshi faces several similar cases filed by gaming authorities in other US states over the platform allegedly offering sports gambling to residents without a license, Arizona was one of the first to file criminal charges.

The state-level cases come as prediction markets are under scrutiny by lawmakers for offering bets on US military actions, citing concerns about insider information in the government.

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