The legal clash centers on whether Washington state gambling laws can supersede federal authority. Kalshi contends that because it is a designated contract market under the Commodity Futures Trading Commission, the federal Commodity Exchange Act grants it exclusive jurisdiction to list these derivatives. Washington Attorney General Nick Brown maintains that the contracts—covering everything from politics and sports to technology—constitute unlicensed gambling, a position that has already prompted similar restrictive orders in Michigan and Nevada.
In section Cryptocurrency
Kalshi Blocks Washington Users Amid Court Battle Over Event Contracts
Kalshi has restricted access for Washington customers, complying with a preliminary injunction that bars the platform from offering seven categories of event contracts. The exchange is now challenging the state’s mandate, arguing that Washington’s decision to grant a temporary enforcement delay to a direct competitor, OG, creates an unfair regulatory double standard.
Kalshi’s motion for reconsideration, filed on August 21, highlights an agreement between Washington officials and the North American Derivatives Exchange, which operates as OG. By allowing OG to continue operations while its own appeals process unfolds, the state has effectively undermined its claim that the contracts pose an immediate threat to consumers. Judge John McHale is expected to rule on the reconsideration request on September 2. Should the court maintain the current order, Kalshi faces a potential $120,000 daily penalty for failing to implement advanced GeoComply location controls by that same deadline. Meanwhile, CFTC Chairman Michael Selig has signaled that the federal regulator will soon propose new rules for event-contract governance, aimed at standardizing consumer protections and market design, though these upcoming federal measures remain separate from the immediate state-level litigation.
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