Kalshi sues Minnesota over prediction markets ban

Kalshi filed a federal lawsuit challenging Minnesota’s new law that would criminalize operating, hosting, or promoting prediction markets across the state starting Aug. 1. The move targets the market’s “event contracts,” a structure Kalshi relies on heavily. Kalshi argues the law violates the U.S. Constitution on two fronts. First, it says the bill infringes the CFTC’s federal “exclusive jurisdiction” under the Commodity Exchange Act, creating conflict with federal derivatives oversight for designated contract markets. Second, it says the restrictions also unlawfully curb prediction market advertising under the First Amendment. The case follows rapid federal action: the CFTC filed a motion on May 19, one day after Gov. Tim Walz signed the bill, warning the state framework conflicts with federal regulation. In parallel, President Trump publicly emphasized that the CFTC should retain sole authority over prediction markets, aligning with CFTC Chair Michael Seligl. This latest lawsuit continues a broader legal push. Kalshi previously secured similar preliminary injunctions against enforcement in New Jersey and Arizona. It also comes amid mounting scrutiny of prediction markets, including bans in other countries and a U.S. investigation into whether government employees may have traded using nonpublic information. For crypto traders, this is a regulatory headline about prediction market platforms and event contracts rather than tokens, but it can influence sentiment toward the sector’s onshore compliance risk and its integration with derivatives-like trading structures.