Kalshi has filed a federal lawsuit against the state of Minnesota in an effort to stop a new law that would ban prediction markets starting on August 1.
The new law would make operating an event contract or prediction market platform a felony in Minnesota, increasing pressure on companies like Kalshi and Polymarket.
According to court documents reported by Courthouse News, Kalshi’s lawsuit names Minnesota Attorney General Keith Ellison, Governor Tim Walz, and Alcohol and Gambling Enforcement Director Jon Anglin as defendants.
Governor Walz signed the law, known as SF 3432, on May 26 as part of a larger public safety package. The measure replaced earlier prediction market proposals and officially bans platforms offering certain event-based contracts in the state.
Kalshi argues that federal law already gives the Commodity Futures Trading Commission (CFTC) exclusive authority over event contracts through the Commodity Exchange Act. The company claims Minnesota is illegally interfering with federally regulated markets.
In the lawsuit, Kalshi described the state law as “a targeted attack on federal DCMs,” referring to federally approved designated contract markets.
The legal battle comes just one week after the CFTC itself sued Minnesota over the same law. The regulator argued that the state was going too far in trying to shut down federally supervised prediction markets.
The dispute is part of a larger national fight over whether prediction markets should be regulated by federal financial laws or state gambling laws.
Sports-related contracts now reportedly make up around 85% of Kalshi’s business, putting the company at the center of several state legal disputes.
Recent court decisions have also added more uncertainty. The Ninth Circuit recently rejected emergency requests from Kalshi and Polymarket in separate cases involving Nevada and Washington, saying federal derivatives oversight does not automatically override state gambling laws.
However, another court decision from the Third Circuit supported Kalshi in a dispute with New Jersey. The conflicting rulings could eventually push the issue to the U.S. Supreme Court.
Minnesota is not the only state taking action. Wisconsin, Nevada, and Washington have also targeted prediction market platforms in recent months.
Kalshi, which was recently valued at around $22 billion in a funding round, is now seeking a court order to block Minnesota from enforcing the law before it takes effect on August 1.
