Prediction market platform Kalshi filed a federal lawsuit against Minnesota Gov. Tim Walz and state officials at approximately 9:59 a.m. UTC on May 29, 2026, challenging a state law that makes it a crime to operate, host, or advertise prediction market platforms starting Aug. 1.
The filing lands ten days after the Commodity Futures Trading Commission made the same move — and deepens a legal collision between state governments and the federal regulatory apparatus that is now playing out in courts across the country.
The lawsuit
Kalshi's complaint, filed in federal court and published by Courthouse News Service, lays out two constitutional arguments.
The first is a Supremacy Clause challenge. The federal Commodity Exchange Act grants the CFTC "exclusive jurisdiction" over derivatives and swaps traded on designated contract markets. Kalshi argues that Minnesota's law, by imposing criminal penalties on activities the CFTC already regulates, is preempted by federal law and cannot stand.
The second is a First Amendment challenge. A provision of the Minnesota statute criminalizes marketing and advertising of prediction market platforms. Kalshi argues that restriction is an unconstitutional limit on commercial speech.
The defendants named in the complaint are Walz and Minnesota Attorney General Keith Ellison, along with other state officials charged with enforcement.
The CFTC got there first
The CFTC filed its own motion against Minnesota on May 19, 2026 — the day after Walz signed the law. That filing, published by Thomson Reuters, argued the legislation violated the U.S. Constitution by allowing the state to criminalize conduct the federal government already regulates through a licensed exchange framework.
The Kalshi lawsuit follows that CFTC action almost verbatim in its Supremacy Clause theory. Two separate challengers — the federal agency itself and the regulated platform — are now pressing identical arguments against the same state law in parallel proceedings.
Kalshi has run this playbook before. The company has already won preliminary injunctions blocking enforcement of similar state-level attempts in New Jersey and Arizona. Each of those cases argued that CFTC's exclusive jurisdiction over DCM-listed contracts leaves no room for state criminal enforcement.
Trump's intervention
Three days before Kalshi filed, President Trump made the federal government's position explicit. In a May 26, 2026, post on Truth Social, Trump said it was "critically important" that the CFTC keep "exclusive authority" over prediction markets. The post named Walz directly alongside New Jersey's Chris Christie, New York AG Letitia James, and Illinois Gov. J.B. Pritzker as officials Trump accused of overreaching on state regulation.
"Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States," Trump wrote. "We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!"
CFTC Chair Michael Selig has echoed the same position, and the White House's Office of Information and Regulatory Affairs has begun reviewing a proposed CFTC rule that would establish a broader federal framework for event contracts — a process that, if completed, would entrench federal supremacy even further.
A widening front
Minnesota is not an isolated case. The past week produced a wave of prediction market restrictions that makes this litigation part of a larger story about the industry's survival.
Indonesia blocked Polymarket on May 25, calling it online gambling. Spain and India followed with their own bans in the same week. Domestically, a House of Representatives committee confirmed last week it is investigating both Polymarket and Kalshi over concerns that government employees may be trading on non-public information — a probe that signals Congress is watching the space even as the executive branch defends it.
State pressure has not let up either. New York AG Letitia James has active lawsuits claiming certain contracts violate state gambling laws. Illinois sent a cease-and-desist. Arizona and New Jersey were blocked at the injunction stage but have not dropped their underlying positions.
Pritzker's response to Trump's Truth Social post captured the states' framing: "The most corrupt President in our nation's history wants to make sure states like ours can't regulate prediction markets so his family and administration can keep profiting."
That exchange illustrates how thoroughly the prediction market dispute has merged with broader federal-state power conflicts and partisan politics.
What the outcome decides
The Minnesota case is now the sharpest test in the federal-vs.-state fight over prediction markets. A federal court ruling in Kalshi's favor would affirm that CFTC-licensed contract markets are beyond the reach of state criminal law — anywhere. That ruling would functionally prevent the patchwork-ban approach that states have been attempting one statute at a time.
A ruling for Minnesota would do the opposite. It would confirm that states retain the power to criminalize platforms regulated at the federal level, which would open the door to a state-by-state fragmentation of the market that Kalshi, Polymarket, and any other CFTC-registered exchange would have to navigate individually.
The courts may not move fast enough for the Aug. 1 effective date. If Kalshi cannot secure a preliminary injunction in the next nine weeks, it faces a choice: exit Minnesota before the law takes effect, or operate in defiance of a criminal statute while the litigation runs.
Two prior injunctions in New Jersey and Arizona suggest the company believes federal courts will act. Minnesota's law is the same theory, the same clock, and the same constitutional arguments — with a governor who signed the bill the day the CFTC was already in court against his counterparts.
Primary sources: Kalshi federal complaint filed May 29, 2026, ~9:59 a.m. UTC (Courthouse News Service); CoinDesk, May 29, 2026; CFTC motion filed May 19, 2026 (Thomson Reuters/fingfx); Trump Truth Social post, May 26, 2026; CoinDesk reporting on Trump statement, May 26, 2026.