State Judge to Kalshi: Your Sports Betting Is Obviously Illegal Skip to content Gizmodo Latest News Reviews io9 Science
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clearly violating Washington state laws against ‘illegal gambling, sports wagering, and bookmaking,’ a judge wrote.
By Tom McKay Published August 14, 2026, 8:07 pm ET Reading time 3 minutes The Kalshi logo displayed over a photo of the
site, which state prosecutors around the country have accused of being an illegal gambling operation. © Shutterstock /
PJ McDonnell Read Later Read Later Comments (31) Gambling site—sorry, we mean “prediction market”—Kalshi is
pretty obviously running an illegal gambling site prohibited by Washington state law, a state judge ruled this week. In
an Aug. 13 press release, the state attorney general’s office touted that King County Superior Court Judge John McHale
sided with prosecutors and issued a “final order” that Kalshi shut down most types of betting in the state. Kalshi
has fought the preliminary injunction in court since mid-July. McHale’s order applies to all bets “related to
sports, elections, politics, entertainment, culture, tech and science, or mentions,” requires Kalshi implement a
geofence by Sept. 2, 2026, and threatens penalties of $120,000 for every day Kalshi continues to operate without a
geofence past that date. Bets on commodities, climate, economics, and finance aren’t subject to the order. The judge
couldn’t be clearer about his thoughts on Kalshi: it offers “online gambling activities” that “Kalshi refers to
as a ‘prediction market’” instead. “Kalshi earns a transaction fee on each bet placed,” McHale wrote, noting
Kalshi never obtained a license with the state’s Gambling Commission. “Each bet risks money, relies in part on
chance, and promises a payout to winners.” In addition to finding it likely that Kalshi’s operations are illegal,
McHale found that its ads were likely to trick a “reasonable consumer” into believing Washington state allows
gambling. In reality, virtually all betting is illegal except on tribal land. To be fair, Kalshi barely puts up the
pretense of its legality under state law—the New York Times noted prosecutors cited Kalshi ads containing text like,
“I found a way to bet on the NFL even though we live in Washington.” Instead, the company just insists that it does
not have to comply with said state laws. Federal law hands “exclusive jurisdiction over our exchange” to the U.S.
Commodity Futures Trading Commission (CFTC), Kalshi spokesperson Jacki McGavi told Gizmodo via email. “We respectfully
disagree with the court’s decision and are considering all legal options.” For some weird reason, the statement also
contained unprompted denials that the company offers markets on wildfires, “war, death, or terrorism.” The next line
in the statement linked to a tweet from Kalshi co-founder and CEO Tarek Mansour on the “death carveout” it invoked
to rule that the death of former Iranian Supreme Leader Ali Khamenei was not a form of “leaving office” by a
particular date. So, clearly, there is some way of profiting off death on the site. Kalshi is facing similar pushback
from state authorities across the country, yet Trump and his cronies have latched onto prediction markets like a
not-particularly-choosy sea lamprey onto a diseased shark. Trump-appointed CFTC chair Mike Selig has embraced this
interpretation of the Commodity Exchange Act, and the agency has sued multiple states (including Connecticut, Arizona,
and Illinois) for attempting to regulate sites like Kalshi and its competitor Polymarket. Earlier this week, the CFTC
announced it had “ordered [Kalshi] to continue to operate” in the state of New York despite a state lawsuit
similarly alleging Kalshi is illegal. It previously issued a similar order in Michigan. (If you’re confused how the
CFTC can “order” a company to operate, it more or less argues Kalshi is legally obligated to process customer bets
in the same manner that stock exchanges do trades.) CFTC chair Mike Selig, whose main priorities have included
legalizing ultra-risky cryptocurrency derivatives, argued in a press release in August that Congress “did not intend
for derivatives exchanges to be regulated under a patchwork of state gaming laws.” This industry-friendly legal
argument has provided crucial cover for “prediction markets” to claim they are operating as mostly unregulated
businesses rather than illegal ones. It certainly doesn’t help that this gigantic, multi-state legal brawl takes place
in a state of genuine uncertainty as to whether, say, the Supreme Court will agree with the companies that the CFTC has
sole jurisdiction. Meanwhile, the New York Times reported this week that the number of reports from Kalshi and
Polymarket raising red flags to the CFTC this year (over 50 and 90, respectively) suggests both sites are rife with
insider traders. Many will likely never face charges courtesy of both staffing shortages at the CFTC and the agency’s
“own deference” to the companies, the Times wrote. Explore more on these topics cftc Cryptocurrency Gambling Kalshi
Mike Selig Polymarket prediction markets Show more Share this story Copied! Sign up for our newsletters Subscribe and
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In Not all tech needs to be a distraction. Gadgets Matthew Wille Jul 28 New York City Council Opens Investigation Into
Prediction Markets Over Predatory Marketing Practices The council sent letters requesting information from Kalshi,
Polymarket, Coinbase, and Gemini Titan. Tech Policy Bruce Gil Aug 12 Federal Government Demands That Kalshi Keep
Operating in New York State Despite Lawsuit The CFTC says it's "required by law to ensure order in these markets, and
that is what we have done today." Cryptocurrencies Mike Pearl Aug 12 FlightAware Is Suing Kalshi Over Flight
Cancellation Bets The flight-tracking platform claims Kalshi is using its data without permission. Commerce Bruce Gil
Aug 11 Prediction Markets Saved From Minnesota Ban by Last-Minute Ruling Passing the law was a bit of an experiment in
the first place. Cryptocurrencies Mike Pearl Jul 28 Report: Stats For the Average Polymarket User Are Unsurprising, but
There’s a Sad Part Pew gathered data on 12,000 Polymarket accounts, and the results will not shock you.
Cryptocurrencies Mike Pearl Jul 23 ©2026 GIZMODO USA LLC. All rights reserved. 𝕏 About Us Other editions Deutsch
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