CoinDesk
Kalshi filed a federal lawsuit against Minnesota seeking to block a new state law that, starting August 1, makes it a crime to operate, host, or promote prediction-market platforms inside the state. The company argues the statute intrudes on the Commodity Futures Trading Commission's exclusive federal authority under the Commodity Exchange Act and unlawfully restricts advertising in violation of the First Amendment.
The filing tracks a motion the CFTC itself lodged on May 19, the day after Governor Tim Walz signed the bill, in which the regulator argued the law unconstitutionally criminalizes at the state level activity governed by federal oversight. Kalshi invoked the Supremacy Clause directly, noting the CEA grants the CFTC "exclusive jurisdiction" over derivatives and swaps traded on designated contract markets. The company also challenged a separate provision criminalizing the marketing or advertising of prediction markets as a First Amendment violation.
Why it matters
Kalshi has already won preliminary injunctions against enforcement actions in New Jersey and Arizona, putting Minnesota on a short list of states testing the limits of federal preemption in event contracts. President Donald Trump publicly backed the CFTC's position this week, telling reporters it was "critically important" that the agency retain sole authority — a notable intervention that signals where the executive branch intends the jurisdictional line to fall as Kalshi, Polymarket, and peers scale up.
Market impact
The case lands alongside a broader squeeze on the sector: Indonesia, Spain, and India have moved to ban prediction markets in the past week, while a U.S. House committee has confirmed an investigation into whether government employees are trading event contracts on nonpublic information. Inside the U.S., the White House Office of Information and Regulatory Affairs has begun reviewing a proposed CFTC rule on prediction markets — a procedural step toward a federal framework that would cover election, gaming, and sports contracts and pre-empt the patchwork of state-level crackdowns Kalshi is now litigating against one at a time.
Frequently asked questions
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What does the Minnesota law that Kalshi is suing over actually do?
Starting August 1, the statute makes it a crime to operate, host, or promote prediction-market platforms inside the state of Minnesota. Kalshi argues both the operational ban and the advertising restrictions are unconstitutional.
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Why is Kalshi arguing the Minnesota law is unconstitutional?
Kalshi is invoking the Supremacy Clause, contending the Commodity Exchange Act grants the CFTC exclusive federal jurisdiction over derivatives and swaps on designated contract markets. The platform also argues the law's criminalization of advertising prediction markets violates the First Amendment.
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Has Kalshi won similar challenges against other states?
Yes. Kalshi has already secured preliminary injunctions blocking enforcement attempts in both New Jersey and Arizona, establishing a track record of federal-court pushback against state-level prediction-market restrictions.
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Where does the CFTC itself stand on the Minnesota law?
The CFTC filed a motion on May 19, the day after Governor Tim Walz signed the bill, arguing the law unconstitutionally criminalizes activity governed by federal oversight. President Donald Trump publicly backed that position this week, saying the agency must retain sole authority.
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How does this fit into the broader global crackdown on prediction markets?
Indonesia, Spain, and India have moved to ban prediction markets in the past week. Inside the U.S., a House committee has confirmed an investigation into whether government employees trade event contracts on nonpublic information, while the White House has begun reviewing a proposed CFTC rule aimed at a unified…
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