Summary
- Kalshi has initiated legal action against Minnesota to halt the state's newly enacted law that criminalizes prediction market operations.
- This lawsuit is supported by the Trump administration, which has already filed its own suit against Minnesota regarding the ban.
- President Trump has publicly endorsed prediction markets, and his son, Donald Trump Jr., provides advisory support to Kalshi and competitor Polymarket.
Kalshi has petitioned a federal court to stop Minnesota from enforcing the first-ever prediction market ban in the United States, aligning with the Trump administration in a growing conflict over state regulations.
In a complaint submitted on Wednesday, Kalshi, the leading prediction market platform in the U.S. by trading volume, requested the U.S. District Court for the District of Minnesota to act against a recently enacted law that classifies the establishment, operation, or promotion of prediction markets as a felony.
This legislation, which was signed into law by Governor Tim Walz last week, is scheduled to take effect on August 1.
The ban on prediction markets in Minnesota represents the latest development in an escalating regulatory confrontation between state authorities and industry platforms regarding the future of this emerging market.
Both Republican and Democratic states argue that wagers on sports, and at times on politics and entertainment, fall under the category of gambling regulated by state law. However, platforms like Kalshi contend that they should be governed solely by federal law, specifically by the CFTC, as event contracts.
The Trump administration has taken a strong stance in support of prediction market platforms in this ongoing dispute. Shortly after Minnesota's prediction market ban was announced, the Department of Justice and the CFTC filed a lawsuit against the state, asserting that the law violates federal jurisdiction. The CFTC has also initiated multiple lawsuits against other states attempting to impose regulations on prediction markets.
In its lawsuit, Kalshi echoed the Trump administration's arguments, stating that the Minnesota law would criminalize activities that are federally permissible.
According to the complaint, by August, Kalshi “will be classified as 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.”
Last month, President Trump expressed his reservations about prediction markets, particularly after a U.S. soldier was apprehended for allegedly using one to place substantial wagers based on confidential information.
However, shortly thereafter, he revised his stance in an interview with Decrypt, mentioning that he knew individuals in the prediction market sector who were “quite satisfied” with the industry's current direction. His son, Donald Trump Jr., serves as an advisor to both Kalshi and its main rival, Polymarket, and is also an investor in Polymarket.
On Tuesday, President Trump reiterated his support, stating on social media that the CFTC should maintain its exclusive authority over prediction markets, and he criticized state officials opposing this approach by labeling them “SCUM.”