Kalshi sued Minnesota to block the state’s prediction market ban set to take effect August 1.
Summary
- Kalshi filed a federal lawsuit against Minnesota over its new law banning the prediction market.
- The company argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event-driven contracts.
- Minnesota law would make operating a prediction market a misdemeanor starting August 1.
Kalshi filed a federal lawsuit against Minnesota to block the state’s new prediction market ban. The law would make operating an event contracting platform in the state a misdemeanor starting August 1.
The lawsuit intensifies a national fight over who regulates event contracts. Kalshi’s complaint, filed in federal court and documented by Courthouse News, names Attorney General Keith Ellison, Gov. Tim Walz and Alcohol and Gambling Enforcement Director Jon Anglin as defendants.
What Minnesota law does
Governor Walz signed SF 3432 into law on May 26, repealing and replacing previous prediction market provisions in SF 4760 and integrating the new measure into the state’s broader public safety agenda. The law prohibits the operation of any marketplace offering certain event contracts.
Kalshi argues that the Commodity Exchange Act gives the CFTC “exclusive jurisdiction” over event-driven contracts, and that Minnesota law “impermissibly usurps” that authority by prohibiting federally designated contract market activities. The company describes the law as “a targeted attack on federal DCMs.”
The Kalshi lawsuit follows the CFTC’s lawsuit against Minnesota a week earlier. Crypto.news previously reported on the CFTC challenge, which framed the law as the state’s most aggressive move to shut down federally regulated markets.
Why this fight is intensifying
Sports contracts now represent approximately 85% of Kalshi’s business, placing the platform at the center of every state gaming business. The Ninth Circuit recently denied emergency motions by Kalshi and Polymarket in the Nevada and Washington cases, ruling that federal oversight of derivatives does not automatically preempt state gaming laws.
The ruling conflicts with a Third Circuit ruling favoring Kalshi v. New Jersey, a split that could push the issue to the Supreme Court. Recent actions by the states of Wisconsin, Nevada and Washington have all targeted the same platforms.
Kalshi was last valued at $22 billion in a recent funding round, making the legal exposure significant. The company is seeking declaratory relief and an injunction to block the application before the August 1 effective date.
