WA AG sues Kalshi, alleges illegal gambling through prediction market

Washington Attorney General Nick Brown filed a lawsuit Friday against Kalshi, an online prediction market platform, alleging it actively circumvents state gambling laws so users can place “prediction wagers” on sports, elections, entertainment awards, and other events.

The range of wagers that Kalshi allows its users to place money on within its market is overwhelming in volume, ranging from prop bets within a presidential State of the Union (including the amount of claps a politican makes, the length of a certain handshake, or if a certain speaker drinks water during a speech), to traffic wagers (including the amount of cars passing through a green light on a busy street), to items like the total number of measles cases in a year.

“Kalshi wants people betting on almost everything possible in life — the outcome of elections, Supreme Court cases, even wars. For Kalshi, every event, every tragedy is nothing more than a potential way for Americans to risk their fortunes and for Kalshi to get rich,” Brown said. “As they advance this bleak vision of the future, they line their pockets and pat themselves on the back for sneaking around Washington’s gambling laws. No more.”

How Kalshi avoids the term ‘gambling’

Kalshi claims it avoids violating state law by branding its betting platform as a “prediction market,” not a gambling outlet, but Washington state defines gambling as “staking or risking something of value upon the outcome of a contest of chance or a future contingent event.”

“Kalshi’s activities fall squarely within that definition. Each Kalshi bet risks money, relies in part on chance, and promises a payout to winners,” the Washington State Office of the Attorney General stated. “Whatever Kalshi chooses to call it, Kalshi’s operations clearly fall under the definition of illegal gambling in Washington.”

Brown’s lawsuit argues that Kalshi violates both the Washington state Gambling Act and the Consumer Protection Act. Washington seeks the company to halt its practices, recover money lost by Washingtonians, and assess civil penalties.

Brown even claims Kalshi has been brazen in its approach to bypassing state laws, citing an advertisement in which one person texts another that they “found a way to bet on the NFL even though we live in Washington.”

“[This] seems to acknowledge that Kalshi knows that they are attempting to skirt state law,” the Washington State Office of the Attorney General wrote. “In fact, Kalshi did find a way to bet on the NFL in Washington; all they had to do was break the law.”

Kalshi under fire with Antetokounpo partnership

Kalshi received recent criticism when NBA superstar Giannis Antetokounmpo announced he was partnering with the online platform in the middle of the current NBA season, one day after the trade deadline passed. Klashi users wagered approximately $23 million on whether he would be traded in the weeks leading to the trade deadline, something some users claimed was a conflict of interest, as they believed Giannis had publicly allowed trade speculation to build.

Antetokounmpo became the first active NBA player to take an ownership stake in a prediction market exchange.

Additional states begin fight against Kalshi

On March 17, Arizona became the first state to file criminal charges against Kalshi, accusing the platform of operating an illegal gambling business. Nevada has a temporary restraining order against Kalshi, while Massachusetts and Utah are in the midst of ongoing court battles against the platform.

While gambling is allowed in certain situations in Washington, internet gambling has always been prohibited under state law.

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