Kalshi, the Commodity Futures Trading Commission-regulated prediction market exchange, filed a federal complaint in a Minnesota district court on May 29, 2026, at approximately 9:59 a.m. EDT, seeking to block a state law that would make it a crime to operate, host, or advertise prediction markets in Minnesota starting August 1.

The filing names Governor Tim Walz and other state officials as defendants. It mounts a two-pronged constitutional challenge: the law violates the Supremacy Clause of the U.S. Constitution, and its advertising restrictions breach the First Amendment.

The law under challenge

Minnesota's statute, signed by Walz, takes effect August 1 and imposes criminal penalties on anyone who operates, hosts, or advertises a prediction market in the state. Kalshi argues the law is unenforceable on its face because Congress, through the Commodity Exchange Act (CEA), has granted the CFTC exclusive jurisdiction over derivatives and designated contract markets (DCMs). Kalshi holds a DCM license from the CFTC, which it argues places its operations squarely within the federal regulatory perimeter — and beyond the reach of state criminal law.

The Supremacy Clause argument is direct: where federal law occupies a field, states cannot layer conflicting criminal prohibitions on top of it. Kalshi contends that the CEA's comprehensive framework for regulating futures and derivatives is precisely such a field, and that Minnesota's statute is therefore preempted.

The second prong targets the advertising ban specifically. Kalshi argues that commercial speech about lawful activity — advertising a CFTC-regulated exchange — is protected under the First Amendment, and that criminalizing such speech imposes an unconstitutional restriction on expression.

The broader federal-state clash

Kalshi's complaint is the second federal legal action against the Minnesota law in as many weeks. On May 19, the CFTC itself filed a motion arguing the statute is unconstitutional under federal preemption doctrine — an unusual step for a federal regulator to enter state litigation directly on the side of a regulated entity it oversees.

The regulatory alignment between the CFTC and Kalshi on this question does not appear coincidental. On May 26, former President Donald Trump said publicly that it was "critically important" for the CFTC to maintain "exclusive authority" over prediction markets — remarks made three days before Kalshi's filing.

Kalshi has sought and won preliminary injunctions against similar enforcement attempts before. The company previously blocked enforcement actions against its operations in New Jersey and Arizona, establishing a record of success at the preliminary injunction stage on the same federal preemption theory it is now advancing in Minnesota.

Stakes and context

The August 1 criminal enforcement date sets a hard deadline. Kalshi will almost certainly seek a preliminary injunction before that date to preserve the status quo while the constitutional questions are litigated. Should a federal court follow the pattern set in New Jersey and Arizona, that injunction is likely to be granted.

The Minnesota dispute is unfolding against a wider global backdrop of regulatory pressure on prediction markets. Indonesia, Spain, and India have each moved to restrict or ban prediction market platforms in the past week, reflecting a wave of regulatory action across jurisdictions that had previously tolerated the sector.

In the United States, the legal pressure on Kalshi is not limited to state-level criminal laws. Congress is separately investigating Kalshi and Polymarket over concerns that government employees may be trading on non-public information — an insider-trading dimension that adds political complexity to the sector's regulatory picture.

For Kalshi, the Minnesota suit is a necessary defense of its operating license. A state law that criminalizes the act of hosting a federally authorized exchange would, if upheld, fragment the regulatory map in ways that could make national operations legally untenable. Kalshi's argument is that Congress made a deliberate choice to regulate this market at the federal level, and that choice is not optional for states to override.

The jurisdictional question will ultimately rest on how broadly courts read the CEA's preemptive scope — an issue with implications not only for prediction markets but for any federally chartered financial institution operating across state lines.

Court filing: Kalshi v. Ellison, Walz, et al., U.S. District Court, District of Minnesota, filed May 29, 2026.

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  • Filing time (9:59 AM EDT): The task brief cites CoinDesk's reported time of "approximately 09:59 AM EDT." The CoinDesk article returned a 404 and could not be accessed to confirm this timestamp independently. The article uses "approximately 9:59 a.m. EDT" with that caveat implicitly — but I cannot confirm it against the primary source. If the editor can verify the time against CoinDesk or the court's PACER docket, the qualifier "approximately" can be removed.
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