Kalshi is asking a federal judge in Seattle to temporarily halt Washington state’s gambling lawsuit while the company pursues an appeal before the Ninth Circuit.
In a motion filed May 8 in the U.S. District Court for the Western District of Washington, the prediction market operator argued that the court should freeze its remand order after sending the dispute back to state court earlier this month. Kalshi warned that moving forward in state court during the appeal could produce conflicting rulings and weaken the company’s ability to challenge the remand decision.
The company told the court that “[b]eing forced to engage in state-court litigation while the appeal is pending would render Kalshi’s appellate rights meaningless and unnecessarily burden the courts and the parties.”
Washington sued Kalshi in March, accusing the federally regulated exchange of offering contracts that violate state gambling laws. The lawsuit focuses on sports event contracts and other prediction market products traded through Kalshi’s platform. According to the filing, Kalshi argued the state’s complaint “is not limited to sports event contracts but arguably targets every contract Kalshi offers on its exchange.”
Federal jurisdiction gambling dispute against Kalshi continues in Washington
Kalshi operates as a designated contract market overseen by the U.S. Commodity Futures Trading Commission. The company has repeatedly argued that federal law preempts state attempts to regulate trading activity conducted on federally approved exchanges.
In its latest filing, Kalshi said “Federal law therefore preempts state regulation of trading on Kalshi,” pointing to the Commodity Exchange Act and its grant of “exclusive jurisdiction” to the CFTC.
The company previously moved the case from King County Superior Court into federal court, arguing that Washington’s claims hinge on federal commodities law and the scope of the CFTC’s authority. Kalshi maintained the dispute raises substantial federal questions because the contracts at issue are listed on a federally regulated exchange.
Washington regulators and state officials have pushed back aggressively against prediction markets tied to sporting events. ReadWrite previously reported that Washington moved to block certain prediction market offerings, arguing the products amounted to unauthorized gambling activity under state law.
Kalshi’s newest motion says the appeal raises “serious and novel legal questions,” including whether the lawsuit necessarily depends on federal law and whether the CFTC should have been included as a necessary party.
The company argued that Washington’s claims “cannot be adjudicated without resolving contested questions of federal law.” Kalshi also said a state court ruling against the exchange would directly interfere with rights tied to its federal market designation.
According to the filing, declaring Kalshi’s contracts illegal inside Washington “is functionally indistinguishable from one revoking Kalshi’s federal designation as applied to Washington.”
Kalshi additionally warned that allowing the case to continue in state court while federal appeals move forward could create “judicial chaos” and inconsistent outcomes. The company pointed to similar litigation nationwide, including the Ninth Circuit case KalshiEX LLC v. Assad, where judges recently heard arguments involving federal preemption and prediction markets.
Washington opposed the stay request, according to the filing.
Featured image: Kalshi / Canva
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