Kalshi sues Minnesota over felony ban on prediction markets

Kalshi filed a federal lawsuit on May 28 asking a court to block Minnesota’s SF4760, a law signed May 18 by Gov. Tim Walz that would make operating or advertising prediction markets a felony beginning Aug. 1, 2026. The company asks the court to declare the statute invalid and stop enforcement.

In its complaint, Kalshi argues its event contracts are federally regulated derivatives under the Commodity Exchange Act and fall under the exclusive jurisdiction of the Commodity Futures Trading Commission. The company contends Minnesota’s law improperly treats those contracts as gambling and infringes on its commercial speech by criminalizing advertising for what Kalshi calls a lawful financial product.

The Commodity Futures Trading Commission filed its own federal lawsuit against Minnesota within 24 hours of the bill’s signing and has asked a court for a preliminary injunction to halt the law while litigation proceeds. The CFTC asserts Congress gave it exclusive authority to regulate event contracts and that state gambling statutes cannot displace that federal framework. If a court grants an injunction, Kalshi would be able to continue offering its platform in Minnesota while the case is decided.

The Minnesota case is part of a broader series of legal actions involving Kalshi and similar platforms. Washington State has brought suit alleging illegal online betting. Arizona has pursued unlicensed gambling charges. The CFTC has also sued over comparable state restrictions in New York and Wisconsin. Courts have reached differing outcomes in other states: a Nevada court found event contracts compatible with state gambling law, while an effort in New Jersey to halt certain contracts failed on appeal. Thirty-eight state attorneys general joined a Massachusetts lawsuit related to these matters, and other firms have sued multiple states over related regulatory questions.

The statute’s effective date is Aug. 1, 2026. The immediate legal question is whether a federal court will issue a preliminary injunction to pause Minnesota’s law pending further proceedings. The litigation is likely to continue through motions and possible appeals as the parties seek final resolutions.