Kalshi follows CFTC in suing Minnesota over law criminalizing prediction markets

The Governor of Minnesota signed into law a measure that, starting Aug. 1, makes it a crime to advertise and operate prediction market platforms across the state.

What to know:

• Prediction market platform Kalshi sued Minnesota in federal court to block a new state law that would criminalize operating, hosting or promoting such markets beginning Aug. 1.
• Kalshi argues the law is unconstitutional, saying it intrudes on the CFTC’s exclusive federal authority under the Commodity Exchange Act and unlawfully restricts advertising in violation of the First Amendment.
• The lawsuit comes as prediction markets face mounting global scrutiny, including recent bans in several countries and a U.S. House investigation into whether government employees are trading on nonpublic information.

Prediction market Kalshi filed a federal lawsuit against a Minnesota bill to criminalize operating, hosting or promoting such a platform in the state starting Aug. 1.

The filing follows a motion filed by the Commodity Futures Trading Commission (CFTC) on May 19, the day after the law was signed by Governor Tim Walz, arguing that the legislation violated the U.S. Constitution by criminalizing at the state level the operation of prediction markets governed by federal regulators.

In its filing, Kalshi claimed the law violates the Supremacy Clause of the constitution, which says the federal Commodity Exchange Act (CEA) grants the CFTC “exclusive jurisdiction” over derivatives and swaps traded on designated contract markets (DCMs).

The platform also challenged a provision that criminalizes the marketing or advertising of prediction markets, saying it violated the First Amendment.

On Wednesday, U.S. President Donald Trump said it was critically important that the CFTC maintain sole authority over prediction markets, echoing CFTC Chair Michael Seligl.

Kalshi has recently won similar preliminary injunctions against enforcement attempts in New Jersey and Arizona.

Prediction markets are facing challenges outside the U.S. and in the past week have been banned in countries including Indonesia, Spain and India.

The U.S. government is conducting a probe into prediction markets, with a House of Representatives committee investigation being confirmed last week.

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The proposal could shape how Kalshi, Polymarket, and other event-contract platforms operate as states challenge the CFTC’s authority.

What to know:

• The White House’s Office of Information and Regulatory Affairs has begun reviewing a proposed CFTC rule on prediction markets, a key step in the federal regulatory process.
• The move signals the CFTC is advancing toward a broader federal framework for event contracts, including those tied to elections, gaming and sports,...

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