Key Highlights
- Kalshi is suing Minnesota to block a new law that bans prediction markets and is set to take effect on August 1.
- Kalshi and the U.S. CFTC both argue that federal law already controls prediction markets, so Minnesota’s ban may be illegal.
- Minnesota says prediction markets are like gambling and should be banned to protect users from harm, especially young and low-income people.
Kalshi, a crypto prediction market platform, has filed a federal lawsuit against Minnesota in 2026 in the United States, challenging a new state law that bans prediction markets and is scheduled to take effect on August 1.
Minnesota recently became the first state in the U.S. to fully ban prediction markets. The law makes it illegal to run, host, or promote platforms that allow users to trade contracts based on real-life events like elections, sports results, and political outcomes.
However, Kalshi in its lawsuit, is asking a federal court to stop this law before it becomes active. It wants a temporary restraining order and a preliminary injunction, which are legal steps used to pause a law while a case is being decided. Kalshi says the Minnesota law should not stand because federal law already controls this area.
Kalshi legal argument on federal control
Kalshi’s main argument is based on the U.S. Constitution’s Supremacy Clause. The company says the federal Commodity Exchange Act (CEA) gives the U.S. Commodity Futures Trading Commission (CFTC) full and exclusive power to regulate event contracts.
In simple terms, Kalshi is saying that Minnesota is not allowed to make its own rules in this space because the federal government already has control over it. The company believes the state law is going beyond its power and interfering with federal rules.
CFTC joins the legal fight against minnesota
The CFTC itself has also taken legal action against Minnesota. The regulator announced its own lawsuit to block the state law on May 19, citing that prediction markets fall under federal financial rules and not state gambling laws.
The CFTC argues that Minnesota is trying to criminalize something that is already legal under federal regulation. CFTC Chairman Michael Selig said, “This Minnesota law turns lawful operators and participants in prediction markets into felons overnight.”
However, Minnesota officials strongly defended the law. They said prediction markets act like gambling platforms where people risk money on uncertain outcomes. Minnesota Attorney General Keith Ellison said regulators are worried about harm to people in the state.
“Prediction markets are designed to be addictive and prey especially on young people and low-income folks.” He said. The state believes these platforms should be controlled like gambling sites, not financial markets.
Other states with similar bans
Meanwhile, this conflict is not only about Kalshi and Minnesota. It is part of a bigger fight happening across the United States about how prediction markets should be treated. Kalshi is one of the biggest names in this space and was recently valued at around $22 billion according to data from Crypto Rank.
Aside from Minnesota, the company is also facing several bans from different states, including Wisconsin and Nevada.
Meanwhile, those in support of prediction markets argue that these platforms are not casinos. Casinos set the odds and users only bet against the house. But in prediction markets, users can both set prices and trade them, more like a financial marketplace.
That is why they believe prediction platforms should fall under federal law instead of state gambling rules.
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