Wisconsin warns on election bets as 3 states block Kalshi

State regulators have won 19 of 23 court injunctions against prediction market platform Kalshi, threatening its $33 billion monthly trading volume ahead of the 2026 US midterm elections.

Wisconsin's warning on election betting marks the latest front in a regulatory campaign that has won 19 of 23 state court injunctions against Kalshi, threatening the platform's $33 billion monthly volume ahead of the 2026 midterm elections.

"These platforms are not above state law, and we will continue to enforce our gambling statutes," said Carrie Woerner, a New York State Assemblymember who commended the attorney general's pursuit of the case.

Washington state's King County Superior Court on July 25 granted a preliminary injunction barring Kalshi's sports contracts, with Judge John McHale ruling they likely constitute illegal gambling. New York's federal court followed on July 8, rejecting Kalshi's federal preemption defense. The company has lost similar cases in Michigan and Nevada.

If the trend holds, prediction market platforms could face operational restrictions in states representing more than 15 percent of US online betting traffic, potentially compressing Kalshi's valuation ahead of a planned fundraising round. The next hearing in Washington is set for Aug. 3, with the injunction effective Aug. 5.

Courts Reject Federal Preemption Defense

Kalshi has argued that the federal Commodity Exchange Act preempts state gambling laws, a position the Third Circuit has supported in related cases. But state courts have consistently rejected that argument. In his written ruling, Judge McHale said the harm to Washington consumers from allowing Kalshi's online gambling activity outweighed any harm the company would face from a pause.

A Kalshi spokesperson pushed back on the decision, telling The Block that individual states lack the power to regulate prediction markets and pointing to rulings from other courts that support this position.

New York Deals Another Blow

New York's July 8 ruling added to the mounting legal pressure. Assemblymember Woerner said prediction market companies should not be allowed to operate in New York without following state rules. Michelle Hadden, who leads the New York State Council on Problem Gambling, raised concerns about how easily people can access Kalshi's markets, noting that betting around the clock from a phone lowers the barrier for those prone to compulsive gambling.

The last time a prediction market faced this level of coordinated state action was in 2022, when multiple states blocked sports betting platforms that lacked regulatory approval. Those platforms lost an estimated $2 billion in combined market share within six months, according to industry data.

This article is for informational purposes only and does not constitute investment advice.