Kalshi has asked a federal judge to prevent Minnesota from implementing the nation’s first-ever prediction market ban, joining the Trump 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 block a recently passed law that makes creating, operating, or promoting prediction markets a felony crime. The law, signed by Gov. Tim Walz last week, is set to take effect on August 1.
Minnesota’s ban is the latest move in an ongoing regulatory conflict between prediction market platforms and state governments over the future of the sector. Red and blue states alike contend that prediction market wagers on sports — and sometimes on politics and entertainment — constitute gambling under state jurisdiction. Platforms like Kalshi, however, argue they should be regulated exclusively at the federal level by the CFTC as event contracts.
The Trump administration has come to the aid of prediction market platforms in this fight. Hours after Minnesota enacted its ban last week, the Department of Justice and the CFTC sued the state, claiming the law illegally encroached on federal jurisdiction. The CFTC has filed several additional lawsuits against other states attempting to regulate prediction markets.
In its lawsuit, Kalshi argued 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, following the arrest of a U.S. soldier who allegedly used one to place wagers with confidential information, making hundreds of thousands of dollars. Days later, Trump walked back those remarks, telling Decrypt he knew people “in the prediction market business” who are “pretty happy” with the industry’s current trajectory.
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, President Trump doubled down on his support for the industry in a social media post, arguing the CFTC should maintain exclusive jurisdiction over prediction markets.
Source: Kalshi Sues Minnesota to Block Nation’s First Prediction Market Ban