Kalshi’s screens are now dark for users in Washington state. The prediction market platform has officially blocked local customers to comply with an injunction from King County Judge John McHale. The penalty is clear: Kalshi faces a fine of $120,000 per day if they fail to meet the September 2 deadline to activate GeoComply’s multi-source location tracking system without submitting a sworn explanation. As an initial step, they have been required to implement IP controls and basic residency verification since August 19.
The blocking measure follows harsh accusations from Washington Attorney General Nick Brown, who labeled Kalshi’s products as a form of unlicensed gambling. With this new rule, Washington officially joins Michigan and Nevada on the list of states restricting the platform’s operations. As a result, residents in the restricted areas can no longer access betting contracts related to sports, elections, politics, entertainment, culture, technology, science, and even word mentions markets.
Why Is There a Double Standard?
Kalshi refuses to back down in the face of these restrictions. On August 21, they officially filed a motion for reconsideration with the court, arguing unequal legal treatment. The target of their protest is a competitor called the North American Derivatives Exchange (OG), which is deemed to receive much more lenient treatment from Washington authorities.
According to case records, Washington agreed to a special agreement with OG on August 8. The deal ensures local authorities will not pursue civil or criminal enforcement against OG’s event contract products until all their appeals processes are completed. Kalshi argues that their position and OG’s are identical in terms of products and services, yet they face entirely different law enforcement actions from the same authority. The court has not yet accepted this argument, and Judge McHale will only consider Kalshi’s motion for reconsideration on September 2 without hearing oral arguments from either side.
Elsewhere, the fate of the prediction market industry is slightly better. A federal judge has just blocked the ban on prediction market operations in Minnesota. The federal judge found that registered exchanges are likely to win the case through arguments of federal law supremacy or preemption.
New Nationwide Rules
This state-level legal clash comes just as the national regulator is preparing to step in and fix the system. Commodity Futures Trading Commission (CFTC) Chairman Selig announced on August 20 that his agency will soon propose amendments to Part 38 and 40 of their current regulations. The amendment process is aimed at clarifying consumer protection, product governance, market design, and listing standards for exchanges.
Selig added that the CFTC had also previously proposed specific rule changes for contracts related to gaming activities, war, terrorism, assassination, and various other illegal activities. For bookmakers and prediction market users, the licensing tug-of-war at the local level like in Washington may not be the end of the story. A more binding compliance test will instead come when the CFTC amendments officially restrict what can still be traded in the market. Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
