TLDR
- Kalshi filed a federal lawsuit against Minnesota after Gov. Tim Walz signed a second prediction market ban bill, SF 3432, on May 26, 2026.
- The lawsuit claims Minnesota’s ban violates federal law by overriding the CFTC’s exclusive authority over event contracts.
- Kalshi argues the state is effectively criminalizing activity that federal regulators have already approved.
- The suit also includes a First Amendment claim, saying Minnesota cannot ban advertising for federally lawful products.
- Similar prediction market lawsuits are active in Arizona and Rhode Island, with federal courts so far siding with federal jurisdiction.
Kalshi has filed a federal lawsuit against the state of Minnesota, targeting a new law that bans prediction markets in the state. The lawsuit was filed after Governor Tim Walz signed Senate File 3432 into law on May 26, 2026.
The move follows a separate lawsuit the Commodity Futures Trading Commission filed against Minnesota just days earlier over a different prediction market bill.
What the New Minnesota Law Does
Minnesota’s SF 3432 repealed and replaced earlier prediction market provisions from SF 4760, a bill Walz had already signed earlier in May. SF 3432 also expanded the state’s broader public safety package.
The new law is set to take effect on August 1, 2026.
Kalshi named Minnesota Attorney General Keith Ellison, Governor Tim Walz, and Alcohol and Gambling Enforcement Division Director Jon Anglin as defendants.
The company is asking a federal court for declaratory and injunctive relief to stop the law before it kicks in.
Why Kalshi Says the Law Is Illegal
Kalshi’s core argument is that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event contracts. The company says Minnesota’s law cuts into that federal authority.
Kalshi operates a federally designated contract market. It says the new state law would treat the company as a felon simply for offering products that federal regulators have already approved.
According to the complaint, SF 3432 not only bans the trading of certain event contracts but also bans the operation of any market that offers those contract types.
Kalshi called the measure a targeted attack on federal contract markets.
The company also raised a First Amendment issue. It argues that Minnesota cannot ban advertising for products and services that are lawful under federal law. The complaint states no court has ever upheld a flat state ban on advertising conduct that federal law permits.
Minnesota had previously joined multistate legal briefs arguing that the CFTC does not have exclusive jurisdiction over sports event contracts. Kalshi pointed to rulings from the Third Circuit and an Arizona federal district court that backed federal preemption in similar cases.
Broader Legal Fight Continues
The case is part of a wider legal battle over prediction markets playing out across several states.
In Arizona, Kalshi and state regulators jointly asked a court to pause appellate briefing while the Ninth Circuit considers related cases involving Kalshi, Crypto.com, and Robinhood. A federal court has already granted preliminary injunctive relief to the CFTC and the Department of Justice against Arizona regulators.
In Rhode Island, the state agreed not to pursue further enforcement against Kalshi and Polymarket while federal litigation is ongoing, following a court order entered on May 26 by U.S. District Judge Mary S. McElroy.
The CFTC had previously said Minnesota’s prediction market ban was the first outright ban of its kind in the United States and warned it could affect longstanding derivatives markets tied to weather and agriculture, including products traded on the Chicago Board of Trade since the early 1990s.
