Kalshi has blocked Washington state residents from accessing its prediction markets while asking a King County judge to reconsider an injunction that restricts seven categories of event contracts. The move intensifies an ongoing legal fight over whether federally regulated prediction markets fall under state gambling laws or CFTC jurisdiction.
Washington Geofencing Now Active
An amended preliminary injunction required Kalshi to install IP address and residency-based controls by Aug. 19. A broader GeoComply system using multiple location sources must be operational by Sept. 2. Kalshi could face a $120,000 daily penalty for failing to meet that deadline unless it submits a sworn explanation for any delay.
The order covers contracts linked to sports, elections, politics, entertainment, culture, technology, and science, along with certain mentions markets. Washington Attorney General Nick Brown argues those products amount to unlicensed gambling under state law.
Kalshi Claims Unfair Treatment Against Competitor OG
Kalshi's reconsideration request relies on an Aug. 18 agreement between Washington officials and competing exchange North American Derivatives Exchange, operating as OG. Under that agreement, the state will not pursue enforcement against OG's federally traded event contracts until related appeals are resolved.
The very event contracts that the state deemed intolerable from Kalshi are now freely available through a competitor, the company argued. Kalshi wants Judge John McHale to vacate parts of the injunction or provide a stay comparable to OG's arrangement. The court has not accepted that characterization.
Multiple States Restricting Access
Washington joins Michigan and Nevada among states currently restricting Kalshi access. Courts in those jurisdictions have ordered location controls while state authorities pursue claims involving unlicensed sports wagering. Kalshi has appealed or challenged those orders, arguing that federally regulated event contracts are derivatives, not gambling products.
The outcomes vary by jurisdiction. A federal judge in Minnesota blocked that state's prediction-market prohibition after finding registered exchanges were likely to succeed on preemption arguments. New York, Connecticut, Massachusetts, Ohio, Maryland, Utah, and Arizona also have pending disputes.
CFTC Prepares New Safeguards
CFTC Chairman Michael Selig said on Aug. 20 that the agency would continue defending its claimed exclusive jurisdiction over federally regulated event contracts. He also acknowledged concerns about retail protections and said the commission would soon propose amendments to Parts 38 and 40 of its regulations.
The proposals are expected to address consumer protection, product governance, market design, listing standards, and incentive programs. The CFTC has already proposed changes explaining how it could assess contracts involving gaming, war, terrorism, assassination, or illegal activity.
The next immediate milestone is Kalshi's Sept. 2 reconsideration decision and geofencing deadline. Until a court grants relief, Washington customers will remain unable to access the restricted markets.
