TL;DR:
Kalshi filed a federal lawsuit against the state of Minnesota to block the entry into force of a law that, starting August 1, will criminalize operating, hosting or promoting prediction market platforms in that state.
The lawsuit follows the steps of the Commodity Futures Trading Commission (CFTC), which on May 19 —one day after Governor Tim Walz signed the measure— filed its own motion arguing that the legislation violates the Constitution by regulating at the state level an activity subject to federal oversight.
In its filing, Kalshi argues that the law contravenes the Supremacy Clause of the Constitution, given that the Commodity Exchange Act (CEA) grants the CFTC exclusive jurisdiction over derivatives and swaps traded on designated contract markets. The platform also challenged a provision that penalizes advertising and marketing of these markets, arguing that it violates the First Amendment by unconstitutionally restricting commercial speech.
The lawsuit comes after Kalshi obtained similar preliminary injunctions in New Jersey and Arizona, where it also faced attempts to enforce state regulations over the same activity. This sequence of litigation has already become a pattern: states seek to impose their own restrictions even as the platform and the CFTC defend the primacy of the federal framework.
On Wednesday, President Donald Trump backed that position, declaring on Truth Social that it is fundamentally important for the CFTC to maintain exclusive authority over prediction markets, in line with statements made by the agency’s chair, Michael Seligl.
Meanwhile, other countries find themselves in a similar situation. In the past week, Indonesia, Spain and India banned prediction markets within their borders. At the same time, a House of Representatives committee confirmed it is investigating whether federal government officials operate on these platforms using privileged information.
