Washington state sued Kalshi on March 27, saying the company ran illegal online gambling in the state through event based contracts that let users bet on sports, elections, wars, public health data, and court cases. Attorney General Nick Brown said the case was filed in King County Superior Court. The state wants to block Kalshi’s activity in Washington, recover money lost by residents, and seek civil penalties. The lawsuit says Kalshi’s products violate Washington’s gambling law and the state Consumer Protection Act. State officials argue that federal regulation does not cancel Washington’s own gambling rules. They also say Kalshi promoted contracts to users in the state even though local law bars that type of betting. Kalshi has kept the same defense in several states. The company says its contracts are federally regulated derivatives, not gambling products, because the Commodity Futures Trading Commission oversees its exchange. That federal versus state authority fight now sits at the center of nearly every case involving prediction markets. The legal fight is spreading beyond Washington Washington’s lawsuit adds to a wider state crackdown. The National Conference of State Legislatures said this month that more than 20 lawsuits and cease and desist actions were pending across the country. Its March 2026 review pointed to recent disputes involving Nevada, New Jersey, Maryland, Massachusetts, New York, and Ohio, while a 38 state coalition backed Maryland’s challenge. The pressure rose further in March. Arizona filed criminal charges against Kalshi on March 17, which legal analysts described as the first criminal case against a CFTC regulated prediction market operator. Meanwhile, Nevada won a temporary restraining order blocking Kalshi from offering certain event contracts in the state while that case moves ahead. At the same time, lawmakers in Washington, D.C., are moving too. A bipartisan Senate bill introduced on March 23 would bar sports betting and casino style contracts on CFTC regulated prediction market platforms such as Kalshi. Together, the state lawsuits and the federal bill show that legal pressure on prediction markets is no longer limited to one state or one type of contract.
