Washington Requests Federal Judge to Remand Kalshi Case to State Court

(AsiaGameHub) –   Washington has petitioned a federal judge to remand its civil enforcement lawsuit against Kalshi back to state court, escalating the state’s ongoing legal conflict with the prediction market platform. This filing arrived on the same day the Third U.S. Circuit Court of Appeals secured a major victory for Kalshi in its dispute with New Jersey.

On April 6, the state submitted a remand motion, arguing that its lawsuit relies exclusively on Washington state law and that Kalshi’s claim of federal preemption does not provide a valid basis for moving the case to federal court. 

The state has criticized what it views as a legal tactic Kalshi uses to stall proceedings, stating in the motion:

Kalshi is aware its effort to remove the case will likely fail. Still, the company moved forward with the removal because delaying the case is financially beneficial.

Washington’s most recent legal submission adds another layer to the increasingly chaotic legal battle over event contracts. 

A divided Third Circuit panel ruled 2-to-1 in Kalshi’s favor during its case against New Jersey, determining that the company’s sports-focused event contracts fall within the purview of the Commodity Exchange Act and the exclusive regulatory authority of the CFTC.

This ruling bolsters Kalshi’s position that disagreements over event contracts should be heard in federal court, even as Washington works to have its own lawsuit against the prediction market platform returned to state court, framing the conflict as a straightforward gambling enforcement matter. 

Washington further contends that Kalshi has employed comparable legal strategies in other cases where the company attempted to move gambling law-related disputes to federal court.

Kalshi’s CEO said their long-term vision is to “financialize everything and create a tradeable asset out of any difference in opinion.” That is not the principle grounded in our constitution nor the future we want for ourselves and our children. We’re suing Kalshi for illegal… pic.twitter.com/VnqgjknWUn

— Attorney General Nick Brown (@AGOWA) April 1, 2026

In its filing, the state points out that federal courts in Nevada and Massachusetts have already dismissed similar removal arguments, and courts in Kentucky and Ohio have also remanded private-party lawsuits.

Washington Argues Removal Attempt Is a Delay Tactic

Washington maintains that Kalshi’s push to move the case to federal court is part of a standard legal playbook the event contract exchange has utilized across multiple similar disputes nationwide. 

In the motion, the state explains that Kalshi has implemented a “two-part strategy” consisting of “preemptively filing declaratory judgment lawsuits in federal courts” and “removing state court cases using increasingly convoluted and weakened removal arguments that have already been widely rejected.”

The state maintains that its lawsuit should stay in state court, as it is rooted solely in Washington state law and does not assert any federal legal claims. 

The state further argues that Kalshi is inappropriately relying on federal preemption as a basis for federal jurisdiction, despite the fact that preemption is typically considered a defense, not a valid reason to remove a case to federal court.

As the state put it in the motion: 

The State’s lawsuit, filed in state court, alleges violations of Washington state law. It does not assert any federal legal claims, reference federal statutes, or raise any federal legal questions.

The motion frames Kalshi’s preemption arguments as a “basic federal preemption defense, not a claim of complete preemption,” which Washington asserts does not satisfy the legal requirements for removing a case to federal court. 

The filing is even more direct when responding to Kalshi’s claim that federal definitions should govern terms such as “bets” and “wagers,” stating:

This is absurd. If the lack of a statutory definition in a state law was enough to create a federal legal issue that grants federal subject-matter jurisdiction, no cases would ever be heard in state court again.

The state is requesting attorney’s fees and court costs, arguing that there was “no objectively reasonable justification” for removing the case, given the numerous remand rulings cited in its legal filing.

Third Circuit Ruling Adds Pressure to Already-Complex Legal Battle

The timing of Washington’s motion is notable, as it was submitted on the exact same day Kalshi achieved its appellate win in New Jersey.

In that case, the Third Circuit ruled that Kalshi’s event contracts qualify as “swaps” under federal law, supporting the company’s position that states cannot regulate these contracts as standard gambling products. 

In response to the ruling, Commodity Futures Trading Commission Chairman Michael Selig posted on X that the decision “reaffirms Congress’ intention for the @CFTC to hold exclusive regulatory authority over trades conducted on DCMs.”

The Third Circuit Court of Appeals’ decision today reaffirms Congress’ intent for the @CFTC to have exclusive regulatory jurisdiction over trades on DCMs. I applaud the Court’s decision to uphold federal law and reject the New Jersey Division of Gaming Enforcement’s attempt to…

— Mike Selig (@ChairmanSelig) April 6, 2026

Although the Third Circuit’s ruling does not directly resolve Washington’s remand request, it may still shape how courts approach the jurisdictional conflict. It also deepens the split over whether prediction markets should be regulated under state gambling laws or federal commodities oversight rules.

For now, Washington is working to ensure the next stage of the legal fight takes place in state court. The outcome of this effort could influence the possible remedies in the lawsuit, as well as how aggressively other states target Kalshi using their own state gambling laws.