Kalshi's turn: Prediction markets platform sues Minnesota over law going into effect in August

Kalshi has sued the state of Minnesota after Governor Tim Walz signed a law that bars prediction markets like Kalshi from operating in the state.

On Wednesday in the U.S. District Court of the District of Minnesota, Kalshi sued Attorney General Keith Ellison, Walz and other government officials, accusing them of violating the Supremacy Clause, which gives federal law the upper hand in disputes with states.

Earlier this month, Walz signed a law prohibiting prediction market activities across the state, with an effective date of Aug. 1. Less than 24 hours later, the Commodity Futures Trading Commission and the Department of Justice sued the state and Walz. 

Prediction markets have surged in popularity over the past year with firms like Polymarket and Kalshi being valued at billions of dollars. The platforms allow people to bet on the outcomes of real-world events, such as elections, sports, and controversial issues related to war.

The CFTC, under Chair Michael Selig has said pointedly that prediction markets fall under the "exclusive jurisdiction" of the agency. Over the past few months, the agency sued five states, including Wisconsin, Illinois, Arizona, Connecticut, and New York over their attempts to restrict prediction market platforms. Meanwhile, states have argued that prediction market platforms are violating local gaming and gambling laws, particularly those related to sports betting.

In Wednesday's complaint, Kalshi argued that the new law brands the predictions market "as a felon in the eyes of Minnesota." 

"Shutting down Kalshi’s ability to offer event contracts in Minnesota would irreparably impair Kalshi’s viability as a 50-state derivatives exchange, and require it to implement complex and costly technological solutions to limit access to Kalshi’s offerings in Minnesota—costs that would not be recoverable when Kalshi ultimately prevails in the Action," according to the complaint. 

Kalshi made similar arguments to the CFTC and said that the federal agency has jurisdiction over prediction markets, not states. Ultimately, Kalshi is asking the court for a temporary restraining order and an injunction to block Minnesota state officials from enforcing the new law. 

Gov. Walz's office did not immediately respond to a request for comment.