After losing roughly $308,000 on sports bets, Bellevue resident Scott Bright is asking Kalshi to pay $580,544.98. His explanation for that gap rests on how he interprets Washington’s gambling-loss law: each event’s losses should count separately, rather than being reduced by winnings from other bets.
The case asks whether a customer can recover more than his net losses, provided he establishes that Washington law treats the transactions as gambling.
According to Ars Technica, Bright filed his lawsuit in September. Washington has “prohibited Internet gambling since 2006,” the filing states. On October 30, Kalshi sought dismissal, rejecting the characterization of wagers on sports results on its platform as “gambling.”
“The contracts which Plaintiff mischaracterizes as gambling are event contracts offered on the Platform subject to the CEA [Commodity Exchange Act], in conformance with the rules and regulations of the CFTC [Commodity Futures Trading Commission], the federal agency which has statutory authority to oversee the CEA,” the motion reads.
The same dispute runs through the wider legal fight involving Kalshi, Polymarket, and similar platforms. These companies say their products are event contracts under federal regulation rather than gambling. Federal courts have yet to agree on whether prediction markets should be regulated as gambling.
There is a timing problem for Bright as well. Washington secured a court order limiting Kalshi’s “illegal gambling operation,” Ars Technica reports, but the order only took effect after Bright had lost more than $300,000. It is unclear whether Bright can recover his losses after his disastrous betting spree, much less receive the higher sum he seeks.
Kalshi’s business has drawn a harsher assessment from state officials. The attorneys general of Washington, Utah, and New York describe the platform as an “online casino” and want it closed. New York attorney general Letitia James alleged in late July that Kalshi was “running an illegal gambling operation.”
Arkansas attorney general Tim Griffin voiced his own criticism last week. In a written statement, he said: “It doesn’t take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling.” He added: “And gambling on an unregulated platform is squarely prohibited by Arkansas law.”
The political challenges are growing alongside the legal ones. It’s a particularly precarious moment for prediction markets following the Democratic Party’s major victory last week. Lawmakers on the left have been “gearing up for an aggressive oversight regime,” according to Politico, and pledging to curb prediction markets. Whether Kalshi can continue defending its position and convince regulators that contracts on sports outcomes do not constitute gambling remains unresolved.
Experts warn that the growth of prediction platforms is helping fuel an epidemic of gambling addiction in the United States, with Bright’s losses representing a small piece of the broader problem. Prediction-platform advertising has reached even the inside of fortune cookies. Meanwhile, coverage of gambling addiction characterizes it as spiraling “out of control.”
Should Bright’s claim go forward, the court will have to consider which measure applies to recoverable losses: the net result of all his betting or the losses on individual events. That difference forms the basis of the amount he is demanding.
