Kalshi Barred From Sports, Election Markets in Washington

That distinction matters for Kalshi’s business model. Sports and election contracts draw large retail audiences and generate some of the platform’s strongest trading volume. Those same categories now trigger state gambling regulations, exposing Kalshi to a patchwork of state-by-state restrictions. The company has argued that its products are federally regulated derivatives overseen by the Commodity Futures Trading Commission and that the Commodity Exchange Act gives the CFTC exclusive authority. The Washington court disagreed for the categories now blocked.

The ruling adds to a growing list of state actions against prediction market operators. Kalshi has now lost access in six states. Baltimore sued both Kalshi and Polymarket on Thursday, alleging their products violate the city’s gambling and consumer protection laws. That case extends the conflict beyond state regulators to local governments.

The CFTC has backed the federal jurisdiction argument in related disputes, increasing tension between the federal derivatives regulator and state attorneys general. If courts accept Kalshi’s interpretation, federally regulated platforms could potentially offer event contracts nationally without obtaining separate gambling licenses in each state. If states prevail, operators may have to block numerous jurisdictions or restructure parts of their businesses.

For Kalshi, the cost goes beyond lost trading volume. Each state-specific restriction requires customised geofencing, added compliance controls, higher legal spending, and different product menus depending on where a user lives. The Washington order allows Kalshi to continue offering commodities, climate, economics and finance contracts in the state, but the sports and election categories that drove much of its recent growth are now off limits there.

The Aug. 19 geofencing deadline now applies. Kalshi must comply or face further contempt action. The Baltimore lawsuit adds a second front, with a local government suing directly rather than waiting for a state regulator. Until higher courts settle the boundary between federal derivatives law and state gambling rules, expansion into sports and other mass-market event contracts remains exposed to further injunctions, geofencing requirements, and enforcement actions.