Prediction market Kalshi filed a federal lawsuit against a Minnesota bill to criminalize operating, hosting or promoting such a platform in the state starting Aug. 1.
The filing follows a motion filed by the Commodity Futures Trading Commission (CFTC) on May 19, the day after the law was signed by Governor Tim Walz, arguing that the legislation violated the U.S. Constitution by criminalizing at the state level the operation of prediction markets governed by federal regulators.
In its filing, Kalshi claimed the law violates the Supremacy Clause of the constitution, which says the federal Commodity Exchange Act (CEA) grants the CFTC “exclusive jurisdiction” over derivatives and swaps traded on designated contract markets (DCMs).
The platform also challenged a provision that criminalizes the marketing or advertising of prediction markets, saying it violated the First Amendment.
On Wednesday, U.S. President Donald Trump said it was critically important that the CFTC maintain sole authority over prediction markets, echoing CFTC Chair Michael Seligl.
Kalshi has recently won similar preliminary injunctions against enforcement attempts in New Jersey and Arizona.
Prediction markets are facing challenges outside the U.S. and in the past week have been banned in countries including Indonesia, Spain and India.
The U.S. government is conducting a probe into prediction markets, with a House of Representatives committee investigation being confirmed last week.