Online esports betting could be blocked in Washington state after Kalshi ruling
Washington state residents may soon be prohibited from wagering on esports online as a judge issued a negative ruling against Kalshi.
Judge John McHale granted the state a preliminary injunction against Kalshi in its lawsuit against the company.
In the ruling, Judge McHale said that Kalshi conducts illegal gambling activities in violation of Washington state gambling laws and that the Commodity Exchange Act (CEA) does not offer preemption.
Online Esports Betting Largely Prohibited In Washington
Washington state gambling laws restrict esports betting to federally recognized tribal casinos. While some tribal casinos offer mobile betting apps (partnered with major operators), the apps use strict geofencing. You must be physically on the casino property for your real-money wager to go through.
Kalshi, therefore, offered residents a new way to wager on major events. The prediction market platform has expanded its esports offerings amid the growth of its sports event contracts.
Residents can also use other prediction market platforms for now, including Polymarket, which has also expanded its presence in esports.
Kalshi Is A Betting Platform, Judge Rules
Judge McHale’s ruling could soon see Kalshi prohibited in the state. In the ruling, he did not entertain Kalshi’s assertion that it is not a gambling platform.
“Kalshi operates an online betting platform that it advertises as a “prediction market” and that allows consumers to bet on thousands of topics ranging from sports, political elections, entertainment, popular culture, and whether public figures will utter specific words or phrases (‘mentions’)”, stated the ruling.
It added, “Kalshi transacts business in King County by offering, operating, conducting, marketing, promoting, and/or distributing unlicensed and illegal gambling activities”.
The ruling does not immediately force Kalshi to block access in Washington. The scope of the injunction will be determined following both parties’ submission by August 3.
Washington May Become Third State to Block Kalshi
If the state enforces the injunction and orders Kalshi to stop accepting Washington state users, it will be the third state to take such action.
Nevada was the first to force the operator to restrict residents from using its markets, followed by Michigan. A judge in Michigan extended the ban on the site for another 30 days last week.
The CFTC, however, continues to back Kalshi and opposes states that it says are infringing on its exclusive right to regulate prediction markets.
“The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations,” said Chairman Michael Selig last week.
