Kalshi sues Minnesota to block prediction market ban

Kalshi filed a federal lawsuit Wednesday in the U.S. District Court for the District of Minnesota seeking an order to block a new state law that makes creating, operating or promoting prediction markets a felony. The law, signed by Gov. Tim Walz last week, is scheduled to take effect Aug. 1.

The company, the largest U.S. prediction-market platform by trading volume, argues the Minnesota statute conflicts with federal law and would criminalize activity that federal regulators permit. The complaint asks the court to prevent Minnesota from enforcing the ban against Kalshi.

Kalshi’s filing says the state penalizes contracts that the Commodity Futures Trading Commission treats as federally regulated event contracts when offered on designated contract markets. The complaint states: “come August, Kalshi will be deemed a felon in Minnesota for offering certain event contracts on its federally authorized DCM that are entirely lawful under federal law-as confirmed by the federal agency with exclusive jurisdiction to make that determination.”

The company’s action follows separate suits filed by the Department of Justice and the CFTC hours after Minnesota enacted the law. The federal agencies contend the state unlawfully intruded on federal jurisdiction. The CFTC has also brought similar suits against other states that have moved to regulate prediction markets as gambling.

Minnesota’s law targets platforms offering wagers on event outcomes, including sports, politics and entertainment. State officials say such wagers are a form of gambling and fall under state authority. Platforms including Kalshi maintain their contracts are financial instruments subject to CFTC oversight and that state bans would create legal uncertainty for federally authorized markets.

President Donald Trump urged federal regulators to retain control over prediction markets and, in a Truth Social post, called some state officials “SCUM,” adding that the CFTC should have “exclusive authority.” Donald Trump Jr. is an adviser to Kalshi and also advises and invests in rival Polymarket.

Kalshi seeks a court order barring Minnesota from enforcing the felony provision when it takes effect on Aug. 1. The lawsuits by Kalshi, the DOJ and the CFTC set up a federal test over preemption and the limits of the CFTC’s authority.