Scott Bright put $315,353.94 into his Kalshi account across 253 separate transfers between June 17 and August 14, 2026 — an average of $1,246 a transfer, more than four a day for 59 days straight. He finished with $983.27. The gap, $308,781.62, is his net loss on sports and tennis wagers. The number in his lawsuit, filed October 23 in King County Superior Court and reported by Ars Technica, is $580,544.98 — 1.88 times his actual loss. The gap between those two numbers is the whole mechanism of the lawsuit.
The statute doing the work is RCW 4.24.070, on Washington’s books in some form since 1879, which gives anyone who loses money at an illegal gambling game a direct civil claim against “the dealer or player winning” or “the proprietor for whose benefit such game was played.” Thirty-one states have an equivalent statute, according to a survey by the law firm Duane Morris of a comparable Illinois claim. Bright’s complaint also invokes Heitfeld v. Benevolent & Protective Order of Keglers, a 1950 Washington Supreme Court ruling holding that a bettor’s wins on one game cannot be netted against losses on another when a court computes what’s owed back. Run Bright’s hundreds of individual wagers through that no-netting rule — summing every losing bet and ignoring every winning one, rather than taking the net difference — and his $308,781.62 net loss becomes $580,544.98 in gross losses on distinct events, which is the figure he’s suing to recover.
Kalshi’s own cut of Bright’s activity, as his complaint itemizes it, is separate from either number. Kalshi collected $5,589.05 in funding fees on his 253 transfers. Because he fed winnings back into new bets rather than cashing out, his account cycled through $14,396,457.30 in total transaction volume — 45.6 times the money he actually deposited — and Kalshi collected $84,062.71 in trading fees on that volume, equal to 26.7 percent of everything Bright put in, his lawsuit says. If the event-by-event theory fails in court, Bright’s fallback request is for Kalshi to return every dollar he deposited plus both fee categories combined, $89,651.76, a sum north of $405,000.
| From | To | How |
|---|---|---|
| Bright's bank account | Kalshi platform (253 transfers, $315,354 deposited) | 253 deposits |
| Kalshi platform (253 transfers, $315,354 deposited) | Counterparties on the platform (includes Kalshi's own trading affiliate) | $14.4m in matched trades |
| Counterparties on the platform (includes Kalshi's own trading affiliate) | Kalshi platform (253 transfers, $315,354 deposited) | wins and losses settled |
| Kalshi platform (253 transfers, $315,354 deposited) | Kalshi fees ($89,652 collected, 28% of deposits) | funding + trading fees |
| Kalshi platform (253 transfers, $315,354 deposited) | Remaining balance ($983.27) | what was left |
Kalshi doesn’t dispute the arithmetic. It disputes the word “gambling.” In an October 30 motion to dismiss, Kalshi argued Bright lost money on federally regulated “event contracts,” not bets, and that only the Commodity Futures Trading Commission has authority to police them under the Commodity Exchange Act. Kalshi’s filing notes Bright “does not allege that anyone misled him about how the platform worked, what it charged, or the risk that any position might lose,” and that his “alleged losses went to counterparties rather than” to Kalshi — his positions, the company says, “were matched with counterparties and resolved according to the outcomes of the underlying events.” Kalshi also moved the case out of state court, removing it to the US District Court for the Western District of Washington, where it is seeking dismissal and, failing that, a stay.
The house on the other side of the trade
Kalshi describes itself as “a neutral exchange platform” that takes no position on any outcome and earns only transaction fees. That description leaves out its trading affiliate, which Kalshi’s own rulebook says “participates on the Platform and provides liquidity to the Platform by placing orders on either (or both) sides of a market at competitive price levels.” Bright’s complaint alleges that affiliate “took the opposite side of a substantial portion of Plaintiff’s positions” — meaning Kalshi’s own related entity, not a stranger, won when he lost, on top of the fees Kalshi charged him for the privilege. Bright cannot prove this with certainty, because, as his complaint puts it, “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.” Neither the lawsuit nor Kalshi’s filings disclose what fraction of the $14.4 million in matched trades in Bright’s account went to the affiliate rather than to other users.
Bright isn’t the only claimant working RCW 4.24.070 against Kalshi. Washington’s attorney general sued the company under the same statute, and in July a King County Superior Court judge found the state likely to prove Kalshi ran an illegal gambling operation, violating both the Gambling Act and the Consumer Protection Act, according to the attorney general’s office. The resulting order barred Kalshi from offering sports, elections, politics, entertainment, culture, tech-and-science or “mentions” contracts to Washington residents and required it to geofence the state, while leaving commodities, climate, economics and finance contracts untouched. Washington’s suit seeks for every resident what Bright is separately suing for on his own behalf: the state’s complaint says the attorney general “is entitled to recover all money Washingtonians have lost through Defendant Kalshi’s illegal gambling operation.” Bright’s transfers predate the geofencing order; his complaint says that when he tried to open the Kalshi app on September 15, he got a message that “using this app in your current location is prohibited.”
A circuit split headed to the Supreme Court
Kalshi’s request for a stay in Bright’s case rests on a legal question no longer confined to Washington. In April, a divided Third Circuit panel ruled 2-1 in KalshiEX, LLC v. Flaherty that the 2010 Dodd-Frank Act’s grant of exclusive jurisdiction to the CFTC over “swaps” preempts New Jersey’s gambling law as applied to Kalshi’s CFTC-registered sports contracts — the same Dodd-Frank clause examined in an earlier story as a provision drafted to keep this kind of product out of federal derivatives markets, not wave it through. In August, the Ninth Circuit went the other way, unanimously, deciding a Nevada case. Kalshi had “not shown a likelihood that the CEA preempts state gaming regulations as applied to its sports event contracts,” Judge Ryan Nelson wrote in the panel’s opinion, adding that “placing sports bets, even when called by another name, is still gambling.”
New Jersey took that split to the Supreme Court on September 2. The justices docketed the case as Flaherty v. KalshiEX, LLC, No. 26-299, on September 8. Kalshi’s brief opposing certiorari, after a 30-day extension granted to its counsel, Neal Katyal, was due November 9 — the day before Bright’s case moved into federal court in Washington. If the justices grant review, oral argument wouldn’t happen before spring 2027 and a ruling wouldn’t land before next June. Kalshi has already lost on this same preemption theory in other forums: states have been winning parallel fights in New York and Connecticut, as a more recent ruling against Kalshi and Coinbase showed.
Loss-recovery claims like Bright’s don’t automatically survive a court’s first look. Illinois’s top court threw one out in a daily-fantasy-sports case this year, ruling in Dew-Becker v. Wu that head-to-head fantasy contests are “predominately skill based” and so never counted as gambling in the first place, killing the Loss Recovery Act claim before it reached any question of netting or damages, according to the Duane Morris alert on that ruling. Kalshi’s defense in Bright’s case runs through the same threshold question — whether what happened on its platform was gambling at all — before any court gets to argue about whether Washington’s 1950 no-netting rule turns $308,781.62 into $580,544.98. Thirty other states with loss-recovery statutes on their books, and an unknown number of Kalshi users who lost money in them, are watching which way that threshold question falls.