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Man who lost $308,000 on sports bets sues Kalshi for offering illegal gambling
Lawsuit demands Kalshi return losses because online betting is illegal in Washington.
A man who lost over $308,000 making sports wagers on Kalshi is suing the prediction market for violating the state of Washington’s ban on online gambling. He’s trying to turn those losses into an overall victory with a lawsuit seeking a payment of over $580,000.
Bellevue, Washington, resident Scott Bright’s “wagering occurred 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,” said the gambler’s lawsuit filed on September 24 in King County Superior Court. Kalshi has since filed a motion to dismiss the lawsuit.
While state attorneys general throughout the US are trying to shut down Kalshi for allegedly violating state gambling laws, Bright’s case tests whether unsuccessful gamblers can obtain restitution from the company through individual lawsuits.
“Washington has prohibited Internet gambling since 2006. Washington has also provided, since long before that, a statutory cause of action permitting any person who loses money at illegal gambling to recover it from the proprietor for whose benefit the game was conducted,” Bright’s lawsuit said.
Even if Bright’s lawsuit fails, gamblers who lost on Kalshi could get money back through the lawsuits filed by state governments. For example, Washington’s lawsuit against the company said the attorney general “is entitled to recover all money Washingtonians have lost through Defendant Kalshi’s illegal gambling operation” under the state’s Recovery of Money Lost at Gambling Act. Washington already won a court order restricting the kinds of wagers Kalshi can offer in the state, but it took effect after Bright’s losses.
Kalshi wants Bright’s lawsuit to be moved to US District Court for the Western District of Washington, saying it must be tried in a federal court instead of a state one. In an October 30 motion to dismiss Bright’s case, Kalshi argued that he did not lose any money on “gambling.” Kalshi said he lost money on “event contracts,” which Kalshi says can only be regulated by the federal government.
“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,” Kalshi said.
We contacted Bright’s attorney, Michael Daudt, about Kalshi’s court filings and will update this article if we get a response.
“Plaintiff alleges that his activity on the platform was gambling and that he ‘lost,’” Kalshi wrote. “He does not allege that anyone misled him about how the platform worked, what it charged, or the risk that any position might lose. Yet, he now sues KalshiEX and its parent, Kalshi Inc., to recover nearly double his own alleged net realized loss under Washington’s gambling loss-recovery statute, and a theory of unjust enrichment.”