A court in Washington has imposed a temporary ban on Kalshi's sports contracts: the platform is accused of illegal gambling.
A federal court in Washington state has issued a ruling to temporarily block sports contracts on the Kalshi platform. The judge, after reviewing the regulator's motion, concluded that the service's activities fall under the definition of illegal gambling according to local law.
This ruling is another blow to the growing market of prediction platforms, which walk a fine line between an innovative financial instrument and gambling. Kalshi, which positions itself as an exchange for event contracts, faces a direct accusation of violating state laws that strictly regulate the gambling sector.
Details of the Injunction
According to the ruling, the temporary ban will take effect no earlier than August 5. Until August 3, both parties have the right to submit additional materials and arguments in their defense. This gives Kalshi a short window to attempt to challenge the decision or mitigate its consequences.
It is important to note that the court found sufficient the arguments that Kalshi's sports contracts are essentially bets on the outcome of events, which is directly prohibited in Washington state. This calls into question not only the platform's current business model but also the legitimacy of the entire sports prediction market in the United States.
Analytical conclusion: This precedent is a serious signal for the entire prediction market industry. If the court confirms that such contracts are equivalent to gambling rather than derivative trading, it could trigger a wave of similar lawsuits in other states. Kalshi and other similar platforms will either have to fundamentally revise their legal structure or seek more favorable jurisdictions. The sports contract market, which many considered a "gray area," risks being completely banned.