Washington State Becomes the 11th: Judge Rules Kalshi Likely Ran an Illegal Gambling Operation
King County Superior Court Judge John McHale granted Washington state a preliminary injunction against Kalshi on 21 July, ruling the platform likely operated an illegal gambling operation under state law. McHale rejected Kalshi's CFTC-preemption defence. He asked both sides to present a compliance plan by the first week of August. Washington is the 11th state to take legal action — and the fourth where a court has ruled against Kalshi, after Michigan, Nevada, and New York.
King County Superior Court Judge John McHale granted Washington state a preliminary injunction against Kalshi on 21 July 2026, ruling the prediction market platform likely ran an illegal gambling operation under Washington state law. McHale rejected Kalshi's CFTC-preemption argument — the same federal defence that succeeded in Arizona in May but has now failed in Michigan, Nevada, New York, and Washington. Washington's Gambling Commission had previously sent Kalshi a notice stating that offering event-based contracts was not authorised in the state; Kalshi had, per court filings, ignored it. McHale asked both sides to present a compliance plan by the first week of August.
Washington is the 11th state to take active legal action and the fourth where a court has ruled against Kalshi. Every state-level court that has directly examined the CFTC-preemption question — Michigan, Nevada, New York, and now Washington — has rejected it and allowed state gambling enforcement to proceed. The lone exception is Arizona, where a federal court granted the CFTC a preliminary injunction in May. The pattern reflects a structural divide: state courts applying state gambling law have consistently held that a CFTC licence does not exempt a platform from state gambling rules, while the CFTC's preemption theory has prevailed only where the agency is the direct plaintiff in federal court.
For UK readers, McHale's framing is instructive. He ruled that Kalshi 'likely ran an illegal gambling operation' — an analysis that does not require engaging with the technical swap-definition question. Washington state law defines gambling broadly, and a federally licensed derivatives exchange is not automatically outside that definition. The UK Gambling Commission takes a similar position: operating gambling facilities without a Gambling Commission licence is a criminal offence regardless of what other regulatory approvals a platform holds. Neither Kalshi nor Polymarket holds a Gambling Commission licence, which is why both remain inaccessible to UK customers.
The specific terms of Washington's injunction are still being negotiated — McHale asked both sides to confer and submit a plan by the first week of August. The ruling adds to two existing hard deadlines: Michigan's August 12 geofencing deadline ($500,000 per day after that) and Minnesota's August 1 felony ban effective date, unless Judge Menendez issues a preliminary injunction first. Three concurrent August deadlines, in three different states, under three different legal theories, with the CFTC simultaneously using emergency authority to tell Kalshi to continue operating in Michigan.
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Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanour, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinising oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.