TLDR Washington state filed a motion to send its lawsuit against Kalshi back to state court, arguing the case is based entirely on state gambling law The state says Kalshi operates an illegal gambling platform under Washington law and is seeking penalties and injunctive relief Washington is following a strategy that already worked for Nevada, where a federal judge agreed to remand a similar case A Third Circuit ruling on April 6 sided with Kalshi against New Jersey, finding federal law may preempt state gambling rules Courts across the U.S. remain split on whether prediction market contracts are gambling products or federally regulated financial derivatives
Washington state is pushing to move its lawsuit against Kalshi back to state court. The prediction market operator had removed the case to federal court, but Washington says the dispute belongs at the state level.
The state filed a remand motion arguing the complaint is based entirely on Washington law. It makes no federal claims and cites no federal statutes.
Washington says the well-pleaded complaint rule supports its position. Under that rule, a case belongs in state court unless the complaint itself raises a federal question.
Kalshi had pointed to federal laws including the Commodity Exchange Act and the Unlawful Internet Gambling Enforcement Act. Washington called those arguments irrelevant, saying a federal defense alone cannot create federal jurisdiction.
The state also rejected Kalshi’s attempt to use federal officer removal. It argued Kalshi is a private company and does not qualify for that type of jurisdictional claim.
Washington Calls Kalshi an Illegal Gambling Operation
At the heart of the case is Washington’s original complaint. The state says Kalshi runs an unlawful gambling operation under longstanding state law.
The filing states that Kalshi is “openly violating Washington law, and turning a profit in the