Kalshi seeks dismissal or delay in Washington bettor’s $580,000 lawsuit

Kalshi has asked a federal judge to dismiss, or put on hold for six months, a Bellevue resident’s lawsuit seeking about $580,000 over losses on the company’s sports-event contracts. Scott Bright alleges that he suffered a net loss of about $309,000 after making hundreds of trades, while Kalshi says his proposed recovery improperly counts the same money repeatedly as it was reused for trades.

The Oct. 30 motions concern a case against KalshiEX LLC and Kalshi Inc. before U.S. District Judge Tana Lin in the Western District of Washington. PlayNJ reported that Bright funded his account through 253 bank debits totaling about $315,000 between June 17 and Aug. 14, and that his suit totals losses without offsetting winning trades.

Bright brought the claim under RCW 4.24.070, a Washington statute permitting recovery of money lost at illegal gambling games. Kalshi argued that the complaint does not specify the individual events, dates or amounts underlying the requested award. It also contends that it was neither the statutory winner nor proprietor of the alleged games because it collected fees regardless of the outcome of a trade.

At the center of the dismissal request is Kalshi’s argument that the disputed products are federally regulated event contracts, rather than gambling subject to Washington law. The company says its contracts fall under the Commodity Exchange Act and Commodity Futures Trading Commission rules, with the CFTC holding statutory authority to oversee that federal regime.

The company also argued that Bright’s case overlaps with Washington’s separate action seeking to recover money lost by state residents. In that proceeding, the attorney general alleged that Kalshi’s platform unlawfully enabled wagers on sports, elections and other events. A King County Superior Court judge found KalshiEX likely violated the state Gambling Act and Consumer Protection Act, ordering it to cease a broad range of Washington operations; the state appeals court declined to stay the preliminary injunction.

Kalshi cited the Supreme Court’s consideration of Flaherty v. KalshiEX in support of its requested pause, saying appellate courts have reached three different conclusions on whether federal law pre-empts state regulation of sports-event contracts. In September, the Sixth Circuit held that Kalshi had not shown its sports contracts qualified as swaps under the Commodity Exchange Act and that the law did not pre-empt Ohio’s or Tennessee’s gambling laws. That decision differed from a Third Circuit ruling favoring CFTC exclusivity, while the Ninth Circuit has also held that the Commodity Exchange Act does not pre-empt state regulation of sports-event contracts.

Judge Lin noted the stay request for Nov. 20 and the dismissal motion for Nov. 27.