Kalshi Fires Back Against Minnesota Bill Banning Certain Event Contracts

• Kalshi filed a lawsuit against Minnesota Gov. Tim Walz (D) and Jon Anglin, director of the Minnesota Alcohol and Gambling Enforcement Division
• The lawsuit challenges Minnesota’s recently approved bill that prohibits certain prediction market event contracts
• As is the case for most of its lawsuits, Kalshi alleges the Commodity Futures Trading Commission has exclusive jurisdiction over the market

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Less than a week after the Commodity Futures Trading Commission filed a lawsuit against Minnesota, Kalshi is also joining the legal battle with a lawsuit of its own.

Counsel for Kalshi filed a lawsuit in United States District Court District of Minnesota on May 27, challenging a recently approved Minnesota bill banning certain prediction markets from the state.

The lawsuit alleges the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over regulating prediction markets and requests a permanent injunction to keep the legislation from going into effect.

First State to Ban Certain Prediction Markets

Both the CFTC and Kalshi’s lawsuits contend the recently signed SF 4760, which includes language prohibiting prediction market contracts based on sports, politics, war, weather, and other markets, oversteps federal regulations by banning the markets from the state.

“Although any state effort to regulate transactions on a DCM would be impermissible under federal law, SF 3432 is notable for the breadth of contracts that it purports to ban. It goes well beyond what other states have argued (largely unsuccessfully) remains subject to state regulation—such as contracts referencing sports, elections, or popular culture—and includes vague and amorphous categories such as ‘events happening to a natural person,’ ‘legal actions,’ or ‘whether a person will make a particular statement,’ and defines ‘wager’ in a manner that could encompass all manner of ordinary contracts,” counsel for Kalshi wrote in the lawsuit.

Gov. Tim Walz (D) signed SF 4760 into law on Tuesday, May 19, making Minnesota the first state to officially prohibit certain prediction markets. The bill will go into effect by Aug. 1, 2026, if upheld by the courts.

The legislation prohibits prediction market contracts centered around the following types of markets:

• Whether a person will make a particular statement
• An athletic event or game of skill
• Any game played with cards, dice, equipment, or any mechanical or electronic device or machine
• War, state or national emergencies, natural or human-made disasters, mass shooting, acts of terrorism, or public health crises
• Federal, state, or local elections
• Legal actions, including but not limited to a civil or criminal suit, grand jury action, jury trial, settlement, plea, or conviction
• Weather
• Death, assassination, or attempted killings
• Events in popular culture, including but not limited to awards and the date a piece of entertainment will be released

By enacting the bill, Kalshi alleges in the lawsuit the state has “taken an extraordinary step challenging the CFTC’s exclusive jurisdiction to regulate DCMs, like Kalshi, pursuant to the CEA (Commodity Exchange Act).”

“Minnesota not only contends that existing state gaming laws are not preempted by the CEA—something that contradicts the plain text and other indicia of Congressional intent. It also apparently deems itself unencumbered by the Supremacy Clause and federal law when enacting new legislation that purports to criminalize the operation of a 50-state federal derivatives exchange that is operating in conformance with federal law, as confirmed by its federal regulator,” counsel wrote.

Kalshi requests in the lawsuit the court enters a temporary restraining order, preliminary injunction, and permanent injunction prohibiting Minnesota and any related employee or state official from enforcing the legalized bill.

Kalshi Joins CFTC in Minnesota Fight

Minnesota is now fighting a legal battle on two fronts with the latest lawsuit.

Less than 24-hours after Walz signed the bill into law, CFTC Chairman Michael S. Selig announced the commission filed a lawsuit against the state.

“This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” said CFTC Chairman Michael S. Selig said in the announcement. “Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last.”

The CFTC filed its lawsuit in Minnesota U.S. District Court against Gov. Walz and several high ranking Minnesota officials, including Attorney General Keith Ellison, requesting an immediate preliminary injunction to keep the law from going into effect in August.

“The injury to the United States, moreover, is irreparable and requires immediate injunctive relief. Constitutional violations, including Supremacy Clause violations, are always irreparable. Furthermore, if Minnesota is permitted to enforce its law, the harm to the United States’s sovereign interests and regulatory jurisdiction could not be undone after final judgment. Preliminary injunctive relief is required to preserve the status quo during the pendency of the case,” CFTC counsel noted in its lawsuit.