Kalshi tells Washington court state enforcement is selective

In a filing entered this week in Washington state court, Kalshi's legal team made an argument that cuts at something different from the federal preemption claims the company has pressed elsewhere: it alleged that Washington has been enforcing its gambling laws unevenly, targeting Kalshi while leaving comparable products from other operators untouched.

The selective enforcement argument is procedurally significant. It does not require Kalshi to win the preemption question — the circuit split question now heading toward the Supreme Court — to survive in Washington. It requires only that the court find the state applied its rules to one party in a way it did not apply them to similarly situated parties. That is a constitutional due process and equal protection claim, and it runs on a separate track from the commodity law questions the Third and Ninth Circuits split over in April and last week.

I have watched agencies use selective enforcement as a pressure instrument often enough to recognize it from the other side. When a regulator picks a prominent defendant and moves against it ahead of others in the same space, the stated purpose is usually deterrence. The unstated purpose is often to generate a result before the legal framework is fully set. Washington is not the first jurisdiction to try this with a new financial product, and the strategy occasionally works — but it creates exactly this vulnerability. If Kalshi can show in discovery that Washington knew of substantially similar products and declined to act, the enforcement action starts to look like targeting rather than regulation.

What makes the Washington filing worth watching separately from Nevada and Michigan is the evidentiary posture it creates. A selective enforcement claim requires the defendant to show both that others were treated differently and that the differential treatment was intentional. That is a high bar, and courts are reluctant to allow the discovery it demands. But if a court permits it, Washington's communications about which operators it pursued and which it did not become relevant. That is uncomfortable territory for any regulatory agency.

The broader landscape has shifted fast. The Third Circuit found for Kalshi on preemption in April. The Ninth Circuit found against it last week, 3-0. New Jersey filed a Supreme Court petition within days. Michigan converted a temporary restraining order to a preliminary injunction with a $500,000 daily fine attached. The states are coordinating, the precedents are running in opposite directions, and the Washington proceeding adds a third legal theory to an already crowded docket.

The equal protection standard that governs selective enforcement claims requires a showing that the government's distinction between similarly situated parties lacked a rational basis, or — for a more demanding version of the claim — that it was motivated by discriminatory intent. Which formulation a Washington court applies will determine how much of this case Kalshi can actually litigate.