Washington Sues Kalshi, Robinhood Responds With Preemptive Suit Against the State
Washington Attorney General Nick Brown sued Kalshi over illegal gambling allegations, then Robinhood preemptively sued Washington in federal court
The sequence took less than a business week. On Friday, March 27, Washington Attorney General Nick Brown filed suit against Kalshi in King County Superior Court, seeking to shut down the platform’s operations in the state, recover money lost by Washington residents, and impose civil penalties.
By Monday morning, Robinhood had filed a preemptive federal suit against Brown and the Washington State Gambling Commission in U.S. District Court in Tacoma.
The playbook is now so well established that it barely requires explanation. This pattern mirrors what happened in Massachusetts, where Campbell sued Kalshi in state court, and Robinhood responded days later with its own federal complaint against the state. The industry has its response choreographed.
This pattern sets the stage for an important jurisdictional battle. State courts have tended to side with state regulators, while federal courts are more inclined to agree with the prediction markets, which have the backing of the CFTC. That battle is now playing out in earnest, as the CFTC also waded into the fray today, suing three states to protect its right to regulate prediction platforms.
What is worth examining is why Washington’s action stands out from the now considerable pile of similar suits, and what Robinhood’s counterpunch actually reveals about the state of this fight.
What Washington Did Differently Than Other States
Most states that have moved against prediction markets have focused their complaints specifically on sports contracts, arguing that event contracts tied to athletic outcomes are sports gambling in everything but name. Washington has staked out a broader position, arguing that all event contracts, not just sports bets, are illegal under state law. That is a more aggressive posture, and it reflects the genuine particularity of Washington’s regulatory framework.
Washington enforces some of the most restrictive gambling laws in the country, with online gambling broadly prohibited and sports betting legal only on tribal lands. The complaint did not limit itself to Kalshi’s sports markets. It went after the full product, including election contracts, Supreme Court outcome markets, and even contracts on the number of measles cases in a given year.
Attorney General Brown said at a press conference that Kalshi had turned “every event, every tragedy” into a betting opportunity.
The complaint also went further than most in its attack on the product’s design. Washington argued that Kalshi’s app itself is part of the harm, pointing to push notifications, influencer promotions, social features, leaderboard rankings, and prompts showing what other users are trading as design elements that encourage repeated betting while downplaying risk.
That framing is significant because it extends beyond the licensing question into consumer protection territory, giving the state additional legal tools and a different evidentiary basis.
The complaint highlighted a Kalshi advertisement in which one user texts another that they “found a way to bet on the NFL even though we live in Washington.” Brown’s office noted the implication was not subtle: “In fact, Kalshi did find a way to bet on the NFL in Washington; all they had to do was break the law.”
Robinhood’s Counter and What It Signals
Robinhood’s federal suit argues the same thing it has argued in Massachusetts and New Jersey: that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over event contracts offered on registered exchanges, and that Washington cannot override that framework by classifying the products as gambling. The company frames the dispute as a fundamental jurisdictional conflict, arguing that allowing individual states to impose separate restrictions would fragment a nationally uniform system and disrupt market liquidity.
What is notable about Robinhood suing rather than waiting is the signal it sends about the stakes. Robinhood claimed in its filing that there is “a concrete and imminent threat” that Washington will file an enforcement action against it, given that it routes customer trades through Kalshi and other exchanges.
Rather than wait to find out, it went to federal court first. That is not exactly a defensive posture. It is an attempt to force the jurisdiction question on favorable terrain before a state court can establish adverse precedent.
The strategic logic is extremely clear for Robinhood. State courts have been inconsistent. Federal courts in Tennessee and New Jersey have sided with the platforms on preemption grounds. State courts in Massachusetts and Ohio have sided with regulators. By filing preemptively in federal court, Robinhood is shopping for the forum most likely to deliver the outcome it wants, and doing so before Washington can consolidate any advantage in its own state system.
The National Score So Far
Kalshi is now fighting more than 20 civil lawsuits, and Arizona’s attorney general filed criminal charges last month, believed to be the first such case against a prediction market. Courts are split: federal judges in New Jersey and Tennessee have ruled that states cannot enforce gambling laws against federally regulated prediction markets, while state courts in Massachusetts and Ohio have ruled that they can.
That split is precisely the condition the Supreme Court exists to resolve, and every new filing makes the eventual trip to One First Street more inevitable. Washington’s broadened theory, covering all event contracts rather than just sports markets, adds a new dimension to a legal question that was already complex enough.
If a federal appellate court eventually affirms that Washington’s broader position is preempted, that ruling would have implications well beyond sports betting. If it does not, the prediction market industry’s 50-state model faces an existential challenge that no amount of CFTC backing can fully insulate it from.
For now, the pattern holds. States continue to sue. Platforms will continue to file federal counters. Courts will most likely disagree. And everyone continues to wait for someone higher up the chain to settle it.
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