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A Washington state court has ordered prediction market operator Kalshi to stop offering a broad range of event contracts to users in Washington, marking another major setback for the platform in its ongoing legal battle with US state regulators.

Under an amended preliminary injunction, Kalshi must prevent Washington residents from trading contracts connected to sports, elections, politics, entertainment, culture, technology and science, as well as certain “mentions” contracts.

The court also ordered the company to stop marketing and advertising the restricted products in Washington.

Kalshi Must Introduce GeoComply Geofencing

The ruling requires Kalshi to introduce technical measures preventing users in Washington from accessing the restricted markets.

The platform must implement initial IP address and residency-based geofencing by August 19, followed by a multi-source geolocation solution powered by GeoComply by September 2.

Existing users will still be allowed to close positions they already hold and withdraw their funds. The order does not require Kalshi to prevent customers from exiting existing positions.

Economic and Financial Contracts Remain Available

The Washington restrictions do not cover every type of event contract offered by Kalshi.

Contracts connected to commodities, climate, economics and finance remain outside the scope of the injunction. This distinction could become important as courts across the US continue to determine whether prediction markets should be treated as financial products or gambling services.

The Washington decision is particularly broad compared with several other state-level restrictions, which have generally focused on sports and election-related markets.

Kalshi Continues to Challenge State Gambling Laws

Kalshi maintains that its event contracts are federally regulated financial products overseen by the Commodity Futures Trading Commission (CFTC) and that states therefore cannot impose their own gambling restrictions on the platform.

Washington and several other states take the opposite position, arguing that contracts tied to sports and other events effectively function as gambling and should comply with state gaming laws.

The dispute has now spread across multiple jurisdictions. Courts and regulators in states including Nevada, Massachusetts, Michigan, Utah and Connecticut have taken actions against Kalshi or challenged its ability to offer certain event contracts.

Prediction Markets Face Growing Regulatory Pressure

The Washington ruling comes as prediction markets face increasing scrutiny across the United States.

Kalshi has rapidly expanded its sports and event-based products, while traditional gambling companies and regulators argue that some of these contracts closely resemble sports betting. The American Gaming Association has also warned that prediction markets could represent a significant threat to the regulated gaming industry.

For Kalshi, the latest injunction could increase the cost and complexity of operating across the US, particularly as different states establish different rules for accessing event contracts.

Source: https://sigma.world/news/washington-blocks-kalshi-event-contracts/