KalshiEX LLC has filed suit against Minnesota officials, arguing that the state’s new law banning prediction markets directly conflicts with federal authority.
The case follows a motion filed by the Commodity Futures Trading Commission on May 19, just one day after Governor Tim Walz signed SF 3432 into law. Both Kalshi and the CFTC say the legislation violates the Supremacy Clause by criminalizing activity that federal regulators have already approved.
Overriding the Commodity Exchange Act
Under the Commodity Exchange Act, the CFTC holds exclusive jurisdiction over event contracts traded on federally designated markets, and Kalshi insists Minnesota cannot override that authority. The filing comes at a time of heightened political attention, with a House of Representatives committee investigation confirmed last week. President Donald Trump has also come out to publicly back the CFTC’s push for sole authority over prediction markets.
The Minnesota case is part of a growing national and international battle over prediction markets. In the United States, courts have split on whether states can regulate event contracts, with appeals pending in multiple circuits. The CFTC has also filed suits against states, including Connecticut, Illinois, New York, and Wisconsin to defend its jurisdiction.
In New Jersey, the Third Circuit upheld a preliminary injunction protecting Kalshi from state enforcement, stating that Congress gave the CFTC exclusive jurisdiction over trades on federally designated contract markets. A federal court in Arizona reached a similar conclusion earlier this year, barring state officials from applying gambling laws to Kalshi’s platform.
Financial Risk Management vs. Gambling Classifications
Kalshi says Minnesota’s law goes further than these earlier disputes, exposing the company to felony charges and irreparable harm if enforced. The company argues that event contracts are not wagers but financial tools that help businesses and individuals hedge risk. The company cites examples ranging from sports insurance firms using contracts to manage millions in exposure, to partnerships with media outlets like CNN and CNBC that rely on market data for reporting.
By treating these contracts as gambling, KalshiEX LLC says Minnesota undermines both economic utility and free speech, since SF 3432 also criminalizes advertising federally approved products. The dispute also reflects a wider global trend, with prediction markets facing bans in countries such as Indonesia, Spain, and India in the past week.
