Kalshi Faces Conflicting Orders from the CFTC and a Washington Judge

On July 20, King County Superior Court Judge John McHale granted Washington’s request for a preliminary injunction, finding that the state is likely to prove Kalshi violated the Washington Gambling Act and the Consumer Protection Act. The injunction could block access to Kalshi’s event-contract platform for Washington residents.

Kalshi Faces Opposite Orders From the CFTC and a Washington Judge

The Commodity Futures Trading Commission (CFTC) has taken the opposite stance. On July 14, the agency invoked its emergency authority in a separate Michigan dispute to stay a Kalshi rule change and ordered the exchange to honor open trades. CFTC Chairman Michael S. Selig warned that a state forcing a designated contract market to breach its obligations could erode market confidence. The agency’s position is that event contracts should be treated as derivatives on nationally regulated exchanges, not as state-specific gambling products.

Kalshi Faces Opposite Orders From the CFTC and a Washington Judge

Kalshi’s platform processes substantial trading volume. CNBC, citing Dune Analytics data, reported that the exchange handled more than $31 billion in notional volume in June, a rise of over 70 % from the $17.9 billion recorded in May. The surge was driven largely by contracts tied to the World Cup, underscoring the market’s rapid growth despite ongoing legal challenges.

Kalshi Faces Opposite Orders From the CFTC and a Washington Judge

Washington Attorney General Nick Brown framed the July 20 ruling as a clear application of state gambling law, emphasizing that the contracts involve risking something of value on future contingent events. The CFTC, through Chairman Selig, contended that state actions that compel a designated contract market to invalidate trades conflict with federal obligations and could damage confidence in the broader derivatives market.

Kalshi Faces Opposite Orders From the CFTC and a Washington Judge

The Washington attorney general’s office indicated that a final order on the injunction will be issued on August 5, after both parties submit briefs on the precise terms. Until an appellate court or the Supreme Court resolves the jurisdictional dispute, Kalshi must operate under a patchwork of federal and state directives, creating uncertainty for users and the emerging prediction-market sector.

Kalshi Faces Opposite Orders From the CFTC and a Washington Judge