Washington state Attorney General Nick Brown sued Kalshi on Friday, calling the company’s claims to be a “prediction market” little more than a front for an illegal gambling operation and saying the company’s vision to “financialize everything” is not what Washingtonians want for their future.
The lawsuit, filed in King County Superior Court, accuses Kalshi of violating Washington’s relatively strict antigambling laws and using the company’s own boasts to prove the point.
Kalshi has claimed to be the first site where people can “bet on the NFL in all 50 states” and more broadly, “bet on everything.”
Online gambling remains illegal in Washington state, except in person at tribal casinos. Kalshi calls itself a “prediction market” that allows customers to buy a share in the likelihood of something happening.
Kalshi allows wagers on every March Madness game, Brown noted. But it also allows wagers on much, much more. You can “trade” — to use Kalshi’s term — or “bet” — to use Brown’s term — on sporting events, elections, the weather, when Kanye will release an album, when Taylor Swift will get married, whether Washington state will enact an income tax by April 1 and almost anything else you can think of.
You can wager on what words Supreme Court justices will say, on the length of presidential news conferences and, most recently, on the outcome of the war in Iran.
“Kalshi really is just a bookie with a fancy name, and a huge amount of venture capital behind them,” Brown, a Democrat, said at a news conference Friday in downtown Seattle. “They publicly pat themselves on the back for being sneaky and getting around Washington’s gambling laws, but it’s worse than being sneaky. It’s a lie, and it’s illegal.”
Brown’s lawsuit is technically about consumer protection — he is seeking to stop Kalshi from operating in Washington, and state law allows people who have lost money “on any illegal gambling games” to recover what they lost.
But he framed it Friday in more sweeping terms, as part of an effort to determine “what kind of a society we want to live in.”
“Do we want everything to be gambling?” Brown asked. “Do we want to be an America that goes from worrying about the human cost of war to betting on the over/unders of that war? What else would we lose about ourselves if the whole world became a craps table?”
Kalshi did not respond to a request for comment Friday.
Brown also recently filed suit against more than a dozen online gambling apps that he alleged were operating illegally in Washington.
Arizona this month filed criminal charges against Kalshi, accusing it of running an illegal gambling operation. Nevada has also sued the company, calling it an unlicensed sports betting operation.
Before the launch of the war with Iran, Kalshi offered wagers on when Ayatollah Ali Khamenei would be out as supreme leader. It has offered wagers on how many measles cases the country will see and what witnesses would say at a hearing on child trafficking.
Founded in 2018 by Tarek Mansour and Luana Lopes Lara, two finance professionals who met at MIT, Kalshi calls itself “an exchange dedicated to trading on the outcome of future events.” The site has grown exponentially since gaining attention during the 2024 election, and the company says it now handles about $10 billion a month in wagers. Its chief “prediction market” competitor, Polymarket, does not currently operate in the U.S.
Both companies have quickly become part of the fabric of American culture. Kalshi has partnerships with The Associated Press, CNN and CNBC. Polymarket has partnered with Major League Baseball, and its odds were featured on the telecast of the Golden Globes. The National Hockey League has partnered with both companies.
Kalshi is regulated by the federal Commodity Futures Trading Commission as a prediction market, which has to date allowed it to operate even in states where online gambling is illegal.
The Trump administration has backed Kalshi and other services like it, threatening to sue states that try to regulate “prediction markets.” Mike Selig, the chair of the CFTC, last month warned state governments against trying to ban “these exciting products.”
“To those who seek to challenge our authority in this space, let me be clear, we will see you in court,” Selig said in a video posted to social media.
The Trump family stands to benefit from the rise of prediction markets. Donald Trump Jr. is a strategic adviser to both Kalshi and Polymarket, and his venture capital fund has invested in Polymarket before a planned launch in the U.S.
Brown’s lawsuit takes pains to note the similarities between the services Kalshi offers and those of a traditional casino or bookie. For instance, Kalshi takes wagers not only on the winner of a game, but on a point spread and an over/under, which is how many points two teams will score, combined. You can make a parlay, linking two wagers together.
Kalshi functions by linking up two customers on opposite sides of a wager. For instance, one person who thinks the Mariners will win and one who thinks the Mariners will lose. The company takes a transaction fee from both users. But to ensure there is enough action, Brown writes, the company also uses its own affiliate, Kalshi Trading LLC, to make wagers. Customers never know if they are pitted against another customer or against Kalshi Trading, Brown writes.
“In this way, Kalshi plays a role similar to that of the house in a traditional gambling model,” the lawsuit says.
