The big picture: Over eight weeks this summer, a Bellevue, Washington, man moved $315,353.94 into Kalshi through 253 separate bank debits, and the platform turned that money over in more than $14.3 million worth of trades on baseball games, tennis matches and other sporting events. When it was over, Scott Bright had lost $308,781.62, while Kalshi had kept $89,651.76 in fees. He is now suing to recover more than $580,000, and his case raises a hard question: is software that matches buyers and sellers of event contracts a federally regulated exchange, or an online casino that Washington law has banned?
Bright filed his complaint in September in King County Superior Court. Kalshi wants the case heard in the US District Court for the Western District of Washington. It filed a motion to dismiss the following month and has also asked the court to put the case on hold.
The complaint lays out the account's activity in detail. Between June and August 2026, Bright funded his Kalshi account through his checking account, and the platform allegedly charged $5,589.05 in funding fees on those transfers. He appears to have put his winnings straight back into new positions. That would explain why the trading volume ended up about 45 times larger than what he deposited.
Bright alleges that the platform ran his deposits through $14,396,457.30 in transactions and took $84,062.71 in trading fees along the way. That works out to 26.7% of everything he put in. When he stopped, $983.27 was left in the account.
Kalshi describes itself as "a neutral exchange platform" with no financial stake in how any event turns out. It makes its money from transaction fees. In its motion to dismiss, the company argued that Bright's positions were matched with other traders and settled on the real-world results, so his losses went to those counterparties, not to Kalshi. It also pointed out that the complaint never alleges that either KalshiEX or its parent, Kalshi Inc., was on the other side of any of his trades.
That neutrality claim runs into how the platform's market making works. Kalshi's rulebook says a trading affiliate supplies liquidity by placing orders on one or both sides of a market at competitive prices. Kalshi says the affiliate sees only the same public information as every other trader.
Bright alleges that the affiliate took the opposite side of many of his positions. If so, he argues, Kalshi was a player winning his money rather than a neutral venue. He admits he can't prove it from where he sits. "The identity of the participant on the opposite side of each of Plaintiff's positions, and the profit each such participant realized, is information exclusively within Kalshi's possession," the complaint says. That means the exchange's own order-matching records could end up deciding a key part of the case.
Bright's legal theory depends on state law. Washington has banned internet gambling since 2006. Under a much older statute, anyone who loses money at illegal gambling can sue to get it back from the operator who profited from the game.
Kalshi says that statute doesn't apply because what Bright traded were event contracts covered by the Commodity Exchange Act. In Kalshi's view, those contracts fall under the federal Commodity Futures Trading Commission, not state gambling regulators. The company also noted that Bright does not claim anyone misled him about how the platform worked, what it charged or the chance that a position might lose.
The federal appeals court that covers Washington has already weighed in on a similar question. In August, the Ninth Circuit ruled that Nevada can regulate Kalshi under its gambling laws, and Bright's complaint quotes that ruling's finding that "placing sports bets, even when called by another name, is still gambling."
The size of his demand stems from a 1950 Washington Supreme Court decision, Heitfeld v. Benevolent and Protective Order of Keglers. Bright argues that under the ruling, wins on separate events can't be netted against losses on others. Counting each event on its own gets him to $580,544.98. If the court rejects that method, Bright wants back everything he deposited plus all the fees, a total of just over $405,000.
Bright's trading happened before Washington managed to restrict the platform. The state attorney general had already sued Kalshi and is trying to recover all the money Washington residents lost on the platform. Kalshi tried to move that case to federal court, but it was sent back to King County in May. In August, a county judge granted a preliminary injunction that requires Kalshi to use geofencing and to stop offering contracts "related to sports, elections, politics, entertainment, culture, tech and science, or mentions" in Washington. Contracts on commodities, climate, economics and finance were not affected.
In mid-September, Bright tried to open the app and got a message saying "using this app in your current location is prohibited," according to his complaint.
Kalshi now wants Bright's case paused until the US Supreme Court decides whether to take up the broader dispute. New Jersey has asked the justices to rule on whether states can regulate the platform under gambling laws. Federal appeals courts have mostly sided with states so far, but not in every case. Kalshi told the federal court that a Supreme Court ruling would settle or simplify every claim and make sure similar lawsuits are treated the same way. It also noted that the state is pursuing the same theory, and seeking the same recovery for Bright, in its own case.