Kalshi has asked a federal judge to prevent Minnesota from implementing the nation's first-ever prediction market ban, joining forces with President Donald Trump's administration in a rapidly escalating regulatory battle against state governments.
In a lawsuit filed Wednesday, Kalshi—America's top prediction market platform by trading volume—urged the U.S. District Court for the District of Minnesota to intervene and block a recently passed state law that makes creating, operating, or promoting prediction markets a felony crime.
The law, signed by Gov. Tim Walz last week, is set to go into effect on August 1.
Minnesota's prediction market ban is the latest move in an all-out regulatory war between industry platforms and state governments over the future of the lucrative new sector. Red and blue states alike contend that prediction market wagers on sports—and sometimes on politics and entertainment, too—constitute gambling bets under state jurisdiction. Platforms like Kalshi, however, claim they should be regulated exclusively at the federal level, by the Commodity Futures Trading Commission (CFTC), as event contracts.
The Trump administration has aggressively come to the aid of prediction market platforms in this fight. Just hours after Minnesota instituted its prediction market ban last week, the Department of Justice and the CFTC sued the state over the law, claiming it illegally encroached on federal jurisdiction. The CFTC has since filed several additional lawsuits against other states attempting to regulate prediction markets.
In this week's lawsuit, Kalshi followed the Trump administration's lead, arguing the Minnesota ban would penalize federally permissible activity. Come August, Kalshi "will be deemed a felon in Minnesota for offering certain event contracts on its federally authorized DCM that are entirely lawful under federal law—as confirmed by the federal agency with exclusive jurisdiction to make that determination," the complaint reads.
Last month, President Trump told reporters he was "never much in favor" of prediction markets, after a U.S. soldier was arrested for allegedly using one to make hundreds of thousands of dollars placing wagers with confidential information. Trump's son, Donald Trump Jr., is an advisor to both Kalshi and its chief competitor, Polymarket, and is also an investor in Polymarket.
On Tuesday, the president doubled down on his support for federal oversight of the sector, arguing in a social media post that the CFTC should continue to push for exclusive jurisdiction over prediction markets, and labeling state leaders who have pushed back against that policy "SCUM."
Why it matters
The conflict pits state gambling-law authority directly against federal commodities regulation, meaning the outcome could clarify which level of government controls a fast-growing class of financial products.
Whether the CFTC holds exclusive jurisdiction over event contracts has not been definitively settled by courts, leaving platforms and states in legal uncertainty as enforcement actions multiply.
Other federally licensed prediction market platforms operating under a Designated Contract Market (DCM) designation face the same legal exposure in states that pass similar bans, making the Minnesota case directly relevant beyond a single state.
