Kalshi has initiated a federal lawsuit against the state of Minnesota in an effort to prevent a newly enacted ban on prediction markets from taking effect. The company contends that the state law, which would classify operating such platforms as a felony starting August 1, violates federal jurisdiction granted to the Commodity Futures Trading Commission (CFTC).
The legal challenge targets Minnesota’s Attorney General, Governor, and the director of alcohol and gambling enforcement, arguing that the Commodity Exchange Act gives the CFTC sole authority over event contracts. Kalshi claims the state’s statute improperly interferes with federally sanctioned contract markets.
This lawsuit comes shortly after the CFTC itself filed a similar action against Minnesota, which was seen as an unprecedented state-level move to shut down regulated markets. Kalshi’s business heavily relies on sports-related contracts, making it particularly vulnerable to state gambling regulations. Recent court decisions in Nevada and Washington have favored state gaming laws over federal derivatives oversight, creating a legal conflict that may ultimately require Supreme Court intervention.
Kalshi, valued at $22 billion, seeks to block enforcement before the August deadline, highlighting the high stakes involved in this regulatory battle.