A Washington court has granted a request to temporarily block Kalshi from offering sports-related event contracts in the state, saying it operates illegal gambling activities under state law.

According to the court document filed Monday, Judge John McHale of King County Superior Court in Washington granted the state's motion for a preliminary injunction against Kalshi.

"[It] offers illegal gambling activities to Washington consumers and solicits bets from Washington consumers on its platform," the judge wrote. 

"The public interests at stake and potential harm to consumers in the continued operation of Kalshi's online gambling activities in the State of Washington outweigh harm to Kalshi," the judge added.

The court said it will review additional materials from Kalshi and the state by Aug. 3 and that the preliminary injunction will not take effect until at least Aug. 5.

"The Court will allow the parties to confer with the hope that Kalshi, through experience with other States, may provide insight into effective ways to protect Washingtonians as the State seeks to do," the judge said.

The dispute centers on whether Kalshi's sports event contracts fall under federal regulation or state gambling laws. The state argues that the contracts violate state gambling laws, while Kalshi contends that the federal Commodity Exchange Act (CEA) preempts those laws.

In the Monday filing, the judge explicitly wrote that the CEA does not preempt Washington state.

"States don't have jurisdiction to regulate prediction markets," a Kalshi spokesperson told The Block in response to Monday's ruling. "Many courts — including the Third Circuit — have made this clear. We're disappointed to see Washington state continue wasting taxpayer dollars."

Nationwide legal battle

The Washington ruling marks the latest setback for Kalshi, federally regulated by the Commodity Futures Trading Commission (CFTC). The prediction markets platform has been battling state regulators over its sports-event contracts. 

Last month, a Michigan judge issued a temporary restraining order against Kalshi, blocking the platform from offering sports-related event contracts in the state. Earlier this month, a judge in New York denied Kalshi's request to block the state from enforcing its gambling laws against the prediction market platform.

Sports and gaming attorney Daniel Wallach told The Block that Judge McHale's Monday ruling aligns with the approach taken by most courts that have considered similar cases.

"To date, there have been 23 judicial decisions on whether a preliminary injunction or temporary restraining order should be issued in connection with prediction-market cases. The states have won 19 out of 23," said Wallach. "The tide is turning sharply in the states' favor."

Wallach pointed out that Kalshi is already barred from offering sports-event contracts in Nevada and Michigan, with Washington poised to become another state on the list.

"While this question ultimately will be decided by the Supreme Court within a few years, Kalshi's map for sports-related contracts could look markedly different in six months than it did earlier this year when it was not the subject of any injunctions barring it from offering sports contracts," Wallach added.

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Meanwhile, the CFTC sued New York in April to block state enforcement against CFTC-registered exchanges. The agency is seeking a declaratory judgment that federal law grants it exclusive authority over event contracts, according to its statement.

Kalshi remains the largest prediction market platform in the world in trading volume, ahead of rival Polymarket. Kalshi's monthly volume reached $33 billion in June, while Polymarket and its U.S. platform saw a combined $13.95 billion, according to The Block's data dashboard.