- Prediction market platform Kalshi has sued the state of Minnesota over a new law that makes operating such markets a felony, which is set to take effect on August 1.
- The lawsuit follows similar legal action from the Trump administration’s Department of Justice and CFTC, which argues the state ban illegally encroaches on federal jurisdiction.
- President Trump has publicly backed prediction markets, and his son, Donald Trump Jr., serves as an advisor to both Kalshi and its rival Polymarket.
Kalshi has escalated its regulatory battle by suing Minnesota this week to block the nation’s first felony ban on prediction markets, which Governor Tim Walz signed into law last week. This legal action directly aligns the platform with the Trump administration’s ongoing fight against state-level crackdowns on the industry.
The company’s lawsuit, filed in U.S. District Court, urges a judge to prevent the state from penalizing what it argues is federally permissible activity. Consequently, Kalshi claims it “will be deemed a felon in Minnesota for offering certain event contracts on its federally authorized DCM that are entirely lawful under federal law.”
This lawsuit follows separate federal action, as the Department of Justice and the CFTC sued Minnesota over the same ban just hours after it was enacted. The administration has filed several additional lawsuits against other states attempting to regulate the markets, framing it as a jurisdictional conflict.
President Donald Trump’s position on the issue has evolved, initially expressing skepticism before publicly supporting the industry. He later walked back critical remarks, telling Decrypt he knew people in the business who were “pretty happy.”
Meanwhile, his son’s involvement adds a political dimension, as Donald Trump Jr. advises both Kalshi and Polymarket and is an investor in the latter. The president recently argued on social media that the CFTC should maintain exclusive jurisdiction, harshly criticizing state leaders who oppose this view.
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