Key Highlights

  • Kalshi filed a federal lawsuit against Minnesota to block a state law that makes operating or advertising prediction market platforms a felony, with the ban set to take effect on August 1, 2026.

  • The complaint argues Minnesota violates the Supremacy Clause of the U.S. Constitution by encroaching on the CFTC's exclusive jurisdiction over event contracts traded on designated contract markets, and separately raises First Amendment grounds.

  • The CFTC filed its own parallel lawsuit against Minnesota on May 19, making it the first time both a regulated platform and a federal regulator have simultaneously challenged the same state's prediction market ban.

Kalshi filed a federal lawsuit against the state of Minnesota on May 28, seeking to block a new law that would make operating or advertising prediction market platforms a felony. Minnesota is the first U.S. state to pass a full ban on prediction markets, with the legislation scheduled to take effect on August 1, 2026.

Kalshi's complaint rests on three core arguments. The primary claim is that Minnesota's law violates the Supremacy Clause of the U.S. Constitution by infringing on the CFTC's exclusive jurisdiction over event contracts traded on designated contract markets. Kalshi also cites CFTC regulations that prohibit platforms from discriminating against customers based on geography, arguing the state ban directly conflicts with that federal obligation. Separately, the company raises First Amendment grounds, contending the law unconstitutionally restricts protected commercial speech.

The CFTC has moved independently on the same front. The regulator filed its own lawsuit against Minnesota on May 19, arguing that prediction markets are a category of financial product governed by federal commodity law rather than state gambling statutes. The CFTC has also taken Rhode Island to court over a separate but similar ban, signaling a coordinated federal posture against state-level efforts to shut down event contract trading.

The litigation puts Minnesota at the center of a widening legal confrontation over whether states have any authority to regulate or prohibit platforms like Kalshi and Polymarket that operate under federal oversight. The core question before the courts is whether the CFTC's designation of event contracts as a regulated financial instrument fully preempts state gambling and consumer protection laws, a ruling that would have direct consequences for every other state considering similar legislation.