Kalshi is taking Minnesota to court. Following Governor Tim Walz’s signing of legislation that would effectively ban prediction markets from August 1, 2026, the platform has filed a formal complaint against the state. It’s become a sprawling regulatory battle across multiple US states, and this is just the latest chapter.

Kalshi’s move follows similar action from the Commodity Futures Trading Commission, which has already sued Illinois, New York, Connecticut, and Arizona over comparable restrictions. The platform is seeking an injunction to block Minnesota’s law, arguing it violates the Supremacy Clause by attempting to regulate an area where the CFTC holds exclusive jurisdiction.

Constitutional Ground

The complaint hinges on two main arguments. First, Kalshi contends that only the CFTC has the authority to regulate contracts traded on designated contract markets, making Minnesota’s outright ban an overreach. Second, the platform is invoking First Amendment protections, claiming its rights have been violated.

Minnesota’s SF 3432 doesn’t just prohibit prediction markets. It criminalises their operation entirely. That’s a significantly harsher stance than restrictions in other states. Governor Walz signed the bill despite the regulatory headwinds facing prediction markets nationally.

The State Digs In

Minnesota Attorney General Keith Ellison isn’t backing down. His office released a statement expressing concern about the “harms” of prediction markets, particularly regarding young people and low-income consumers. The AG’s position reflects broader scepticism about the sector, though these arguments haven’t stopped the CFTC from pushing back against similar state-level restrictions.

Worth noting: President Donald Trump has publicly endorsed prediction markets, criticising their opponents in characteristic fashion.

Global Headwinds

Minnesota’s move reflects international regulatory trends. Spain has issued a temporary block on both Polymarket and Kalshi while conducting a three to four month review, and South Korea has followed suit. Indonesia has gone further, implementing an outright ban on Polymarket. The ban was reportedly triggered by a market querying whether the incumbent president would complete his term.

How this plays out in Minnesota could shape how other states approach regulation of the rapidly growing prediction market sector.