In brief
- Kalshi sued Minnesota to block the state’s new law making prediction markets operations a felony.
- The lawsuit aligns with the Trump administration, whose DOJ and CFTC already sued Minnesota over the ban.
- President Trump has backed prediction markets publicly. His son, Donald Trump Jr., advises Kalshi and rival Polymarket.
Kalshi has asked a federal judge to prevent Minnesota from implementing the nation’s first-ever prediction market ban, joining forces with President Donald Trump’s administration in a rapidly escalating regulatory battle against state governments.
In a lawsuit filed Wednesday, Kalshi—America’s top prediction market platform by trading volume—urged the U.S. District Court for the District of Minnesota to intervene and prevent the state from implementing a recently passed law that makes creating, operating, or promoting prediction markets a felony crime.
The law, signed by Gov. Tim Walz last week, is set to go into effect on August 1.
Minnesota’s prediction market ban is the latest move in an all-out regulatory war between industry platforms and state governments over the future of the lucrative new sector.
Red and blue states alike contend prediction market wagers on sports—-and sometimes, on politics and entertainment, too—constitute gambling bets under state jurisdiction. Platforms like Kalshi, however, claim they should be regulated exclusively at the federal level, by the CFTC, as event contracts.
The Trump administration has aggressively come to the aid of prediction market platforms in this fight. Just hours after Minnesota instituted its prediction market ban last week, the Department of Justice and the CFTC sued the state over the law, claiming it illegally encroached on federal jurisdiction. The CFTC has filed several additional lawsuits against states attempting to regulate prediction markets.
In this week’s lawsuit, Kalshi followed the Trump administration’s lead, arguing the Minnesota ban would penalize federally permissible activity.
Come August, Kalshi “will be deemed a felon in Minnesota for offering certain event contracts on its federally authorized DCM that are entirely lawful under federal law—as confirmed by the federal agency with exclusive jurisdiction to make that determination,” the complaint reads.
Last month, President Trump told reporters he was “never much in favor” of prediction markets, after a U.S. soldier was arrested for allegedly using one to make hundreds of thousands of dollars placing wagers with confidential information.
Days later, however, the president walked back those remarks, telling Decrypt he knew people “in the prediction market business” who are “pretty happy” with the industry’s current trajectory. Trump’s son, Donald Trump Jr., is an advisor to both Kalshi and its chief competitor, Polymarket. Trump Jr. is also an investor in Polymarket.
On Tuesday, the president doubled down on that position, arguing in a social media post that the CFTC should continue to push for exclusive jurisdiction over prediction markets, and labeling state leaders who have pushed back against that policy “SCUM.”