Washington’s attorney general has filed a fresh lawsuit against prediction-market operator Kalshi, escalating a wave of state-level challenges that accuse the platform of operating an unlicensed gambling business. What happened - On Friday, Washington AG Nick Brown sued Kalshi, alleging the company’s website and app let users place money on future events and collect payouts based on outcomes — activity Washington says violates the state’s online gambling ban and tightly regulated gaming laws. - The complaint asserts Kalshi breached the Washington Consumer Protection Act, the Gambling Act, and the Recovery of Money Lost at Gambling Act, arguing each Kalshi contract involves money, chance and a payout and therefore meets the state’s legal definition of gambling. Washington officials also said the platform functions like a sportsbook by presenting event “odds” that determine payouts. Kalshi’s response - Kalshi quickly asked a federal court to take the case, saying the same legal questions are already being litigated in other federal courts and that Washington brought the lawsuit without prior warning or discussion. Broader legal pressure - This suit follows a string of recent setbacks for Kalshi. Earlier this month a Nevada judge temporarily barred Kalshi from operating in that state, finding regulators were likely to prevail. Days earlier Arizona AG Kris Mayes charged the company with running an illegal gambling operation without a license and alleged unlawful election wagering. - Kalshi maintains the U.S. Commodity Futures Trading Commission (CFTC) has exclusive authority over its event contracts — a federal preemption argument that the company is using to push these disputes into federal courts. Why it matters for crypto and markets - Prediction markets occupy an uneasy space between financial markets and gambling, and regulators are increasingly scrutinizing them. For crypto-native and tradfi platforms offering event-based contracts, the Washington suit underscores that state gambling laws can be a major legal risk even when firms claim federal oversight. - The outcome of these cases could set important precedents for how prediction markets are regulated across the U.S., with implications for similar services in the crypto ecosystem. The litigation is ongoing, and Kalshi’s push to federal court signals this fight likely won’t be settled quickly. Read more AI-generated news on: undefined/news