Prediction market platform Kalshi has filed a federal lawsuit against the state of Minnesota, seeking to overturn a newly signed law that makes it a felony to operate, create, or promote prediction markets. Governor Tim Walz signed the legislation earlier this month, with an effective date of August 1, prohibiting residents from using platforms that allow betting on real-world events, including elections and sports.
The lawsuit, lodged in the U.S. District Court for the District of Minnesota, names Governor Walz, Attorney General Keith Ellison, and other state officials. Kalshi argues the state law violates the Supremacy Clause of the U.S. Constitution by encroaching on territory already regulated by the Commodity Futures Trading Commission (CFTC). The CFTC, under Chair Michael Selig, has repeatedly asserted exclusive jurisdiction over prediction markets, which it classifies as event contracts.
Just hours after Minnesota enacted the ban, the Department of Justice and the CFTC jointly sued the state, marking an aggressive federal pushback. This legal offensive is part of a broader pattern: the CFTC has previously sued Wisconsin, Illinois, Arizona, Connecticut, and New York over similar state-level restrictions. Kalshi’s complaint warns the Minnesota law will “brand the prediction market as a felon” and cause “irreparable” harm to its viability as a 50-state derivatives exchange, forcing costly technological barriers to block access for Minnesota residents.
The Trump administration has become a vocal ally of prediction platforms. President Trump publicly supported exclusive CFTC control, calling opposing state leaders “SCUM” in a social media post. Donald Trump Jr. serves as an advisor to both Kalshi and its chief rival Polymarket, in which he is also an investor. This alignment gives Kalshi’s legal challenge political weight beyond the courtroom.
