Washington Man Lost Over $300K on Kalshi, Files Lawsuit Against the Company

If you’ve been reading about prediction markets in the last couple of years, you might know that providers such as Kalshi and Polymarket have faced many lawsuits from various organizations and institutions. In fact, earlier this week, the Alabama-Quassarte Tribe filed a lawsuit against Kalshi over its PokkeTrades partnership. However, private citizens are also suing Kalshi; one man who lost over $308,000 on the company’s platform filed a lawsuit, claiming the prediction market provider violated Washington State’s ban on online gambling. Man Sues Kalshi After Losing $308,000 Scott Bright from Bellevue, Washington, argued in a lawsuit filed on September 24 in King County Superior Court that his wagers were placed “at a time when it was unlawful in Washington and when the Washington Attorney General had already sued KalshiEX LLC in this Court alleging precisely that.” Kalshi has since filed a motion seeking to dismiss the case. The Plaintiff’s side essentially argues that Kalshi’s product constitutes online gambling, which Washington has explicitly banned since 2006. The state has long had a law allowing individuals who lose money through illegal gambling to sue the operators responsible and recover their losses, the Plaintiff argues. According to the lawsuit, between June 17 and August 14, 2026, Bright made 253 separate transfers from his checking account to Kalshi, totaling $315,353.94. The company allegedly charged $5,589.05 in funding fees on these transactions. After accounting for all his wagers, Bright incurred a net loss of $308,781.62, leaving him with an account balance of just $983.27. Kalshi countered that his alleged losses went to counterparties rather than the company itself. It explained that Bright’s “positions were matched with counterparties and resolved according to the outcomes of the underlying events.” Even if Bright’s lawsuit is unsuccessful, gamblers who lost money on Kalshi may still be able to recover their losses through legal actions brought by state governments. Earlier this summer, Washington state sued Kalshi. According to that lawsuit, the state is entitled to recover all money residents lost through Kalshi’s allegedly illegal gambling operations under Washington’s Recovery of Money Lost at Gambling Act. Kalshi Responds to the Lawsuit For its part, Kalshi used a defense which it has used many times before, which is that its products are not considered gambling under federal law. The company argued that the contracts Bright described as gambling were, in fact, event contracts offered through its platform and regulated under the Commodity Exchange Act (CEA), in accordance with the rules and regulations of the Commodity Futures Trading Commission (CFTC), the federal agency responsible for overseeing the legislation. Furthermore, Kalshi argued that Bright characterized his activity on the platform as gambling and claimed to have lost money. However, he did not allege that the company misrepresented how the platform operated, the fees it charged, or the risks associated with losing a position. Despite this, Kalshi noted, Bright was seeking to recover nearly twice his alleged net realized losses from Kalshi and its parent company, Kalshi Inc., under Washington’s gambling loss-recovery statute and an unjust enrichment claim. In other news about Kalshi, the company suffered another setback as the Ninth Circuit Court of Appeals decided to reject the company’s request for a rehearing of its Nevada case.