A King County Superior Court judge has ordered KalshiEX (Kalshi) to restrict a substantial part of its prediction market offering in Washington.
The court found that the state is likely to succeed in its claims that Kalshi violated gambling and consumer protection laws.
The final order follows a preliminary injunction granted in July and covers event contracts involving sports, elections, politics, entertainment, culture, technology, science and "mentions," where contracts are based on whether specified words will be used by a public figure.
Kalshi must introduce IP address and residency-based geofencing by August 19, followed by a multi-source geofencing system by September 2.
Advertising relating to the affected contracts must also stop for Washington consumers.
The underlying lawsuit was filed by Washington Attorney General Nick Brown in March. Washington argues Kalshi's event contracts constitute gambling under state law and that the exchange has operated without the licenses and controls applied to regulated gambling businesses.
Kalshi's position in its wider litigation is that its contracts are derivatives regulated at federal level by the Commodity Futures Trading Commission (CFTC), limiting states' ability to apply their gambling laws. That question has produced differing outcomes as states increase enforcement against prediction markets.
In April, the Third Circuit upheld a preliminary injunction preventing New Jersey from enforcing its gambling laws against Kalshi's sports event contracts.
The 2-1 majority found Kalshi had demonstrated a reasonable likelihood of succeeding on its argument that the Commodity Exchange Act pre-empts the relevant state laws.
Washington's order therefore adds to a fragmented legal picture rather than establishing a nationwide position.
At least 11 states had taken enforcement action against prediction market platforms by April, while 30 had joined amicus briefs supporting state intervention.
The federal regulator has meanwhile become increasingly involved. On August 11, the CFTC exercised emergency authority after New York sought an order restricting Kalshi and more than $36bn in damages.
The CFTC ordered the exchange to continue operating in accordance with Commodity Exchange Act core principles and said it had separately brought actions against nine states to defend its claimed federal jurisdiction.
Earlier this month, a federal judge ruled that Utah could enforce its gambling laws against Kalshi, rejecting the exchange's attempt to prevent state action. Kalshi appealed the decision to the Tenth Circuit.
Washington prohibited internet gambling through amendments to its Gambling Act in 2006, providing the statutory basis for part of the state's case against Kalshi
