(AsiaGameHub) –   Washington State has initiated legal proceedings against Kalshi, claiming the gambling firm operated unlawful online betting through its public event contracts trading platform. The complaint was filed on March 27 and states that Kalshi permits its users to place wagers on a variety of upcoming events.

The lawsuit notes that the platform provides markets for sports, elections, entertainment, and public broadcasts—all accessible through its website and mobile applications. The state argues that Washington residents aged 18 and older can deposit funds, place bets, and use the platform across the state, while Kalshi generates revenue by charging transaction and service fees.

Upon receiving the complaint, Kalshi transferred the lawsuit from King County Superior Court to the U.S. District Court for the Western District of Washington in Seattle. The company believes the case should fall under federal regulation, specifically the Commodity Exchange Act.

The lawsuit claims that after its 2021 launch, Kalshi quickly expanded its offerings from limited market trading to include geopolitical events, sports betting, and more. Additionally, it states the company began offering spread bets, totals proposition bets, and combination wagers—parlay-style bets that use request-for-quote pricing.

Washington officials also accuse the platform of enabling wagers on local political races, college basketball games, and even non-sports topics such as public hearings and global political developments. The state maintains these activities fit its definition of gambling, as well as professional gambling and bookmaking.

The lawsuit also highlights Washington’s stringent gambling regulations. Online betting is illegal in most cases, with exceptions like tribal sports betting—which must occur only on tribal lands. Regulators have taken action in the past against operations they deemed illegal, including sweepstakes and social casino models.

The complaint requests various forms of relief, including a ruling that Kalshi’s operations are illegal, a permanent injunction, monetary damages, and reparations. It further demands an audit of Washington-based users and the recovery of funds allegedly lost by state residents.

A key focus of the lawsuit is product design and public health concerns. The state argues that Kalshi’s platform includes features like notifications, social tools, and leaderboards that could encourage compulsive betting. It also expresses concern about marketing strategies aimed at younger audiences and claims the platform blurs the line between financial trading and gambling.

In its motion to transfer the case, Kalshi primarily addresses legal jurisdiction in its brief response to the allegations. The firm states it is a federal derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC). It notes the case involves federal legal questions, such as whether state gambling laws apply to event contracts traded on a regulated market.

Kalshi further noted that several federal courts are currently hearing similar lawsuits and emphasized its transfer was timely, as the company had not yet been formally served when the case was moved.