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Kalshi has sued Minnesota in federal court to block the state’s new prediction-market ban before it takes effect on Aug. 1.
The lawsuit opens a second front against the measure after the CFTC filed its own challenge last week. Kalshi says the law would make it a felon for offering event contracts on its federally regulated designated contract market.
Kalshi Says CFTC Rules Override Minnesota Ban
Kalshi’s complaint argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event contracts traded on designated contract markets. It says Minnesota cannot apply a separate gambling-law regime to products already allowed under federal derivatives rules.
The company is seeking declaratory and injunctive relief against Attorney General Keith Ellison, Governor Tim Walz and Jon Anglin, director of the state’s Alcohol and Gambling Enforcement Division. Kalshi also argues that federal law excludes transactions on registered CFTC venues from being treated as bets or wagers for interstate-gambling purposes.
Complaint Adds First Amendment Challenge
Kalshi is also challenging the law on free-speech grounds. Its complaint says Minnesota’s statute would criminalize advertising and promotion tied to Kalshi’s federally permitted products.
That adds a First Amendment claim to the preemption fight. The case turns not only on whether Minnesota can regulate the contracts as gambling, but also on whether it can restrict promotion of products Kalshi says are legal under federal law.
SF 3432 keeps Aug. 1 Enforcement Date
Kalshi’s case targets SF 3432, a later measure that repealed and replaced parts of SF 4760 while keeping the Aug. 1 effective date. The CFTC’s May 19 lawsuit challenged SF 4760, the first version of the state ban.
Minnesota has argued the restriction is needed to address gambling-related harms. Kalshi and the CFTC argue the state is trying to criminalize federally regulated markets that Congress placed under national oversight.
Court Faces Injunction Decision Before Aug. 1
The next issue is whether the court grants a preliminary injunction before the law takes effect. An injunction would block Minnesota from enforcing the ban while the case proceeds.
If Kalshi or the CFTC succeeds, the state’s ban would be paused during the broader federal challenge. If Minnesota prevails, the case could become an early test of whether states can wall off event-contract platforms even when the CFTC says those markets fall under federal derivatives law.
