TLDR
- Kalshi challenged Minnesota’s new prediction market law in federal court this week.
- The CFTC filed against Rhode Island over sports event contract claims.
- Minnesota’s law bars advertising and operating prediction market platforms statewide.
- Kalshi says federal law controls event contracts on regulated markets.
- Courts remain split on whether states can restrict prediction market platforms.
Kalshi and the CFTC are expanding their court fights with state officials. The latest cases involve Minnesota and Rhode Island. Both disputes center on who can regulate prediction markets in the United States. The cases add pressure to a legal debate that may reach the Supreme Court.
Minnesota recently changed state law to block prediction market platforms. The law bans advertising, creating, operating, or helping such platforms. Soon after, CFTC Chair Michael Selig filed a federal case against Minnesota officials. Kalshi then brought its own lawsuit against the state.
Minnesota law draws federal challenge
Minnesota Governor Tim Walz signed the bill into law last week. The measure amended state statutes on prediction market platforms. It blocks companies from running or helping those platforms in Minnesota. State officials have not been quoted in the report explaining their legal view.
Selig filed in federal court less than 24 hours later. The CFTC chair called the law the “first outright ban” on prediction markets. His filing argued that Minnesota moved into an area controlled by federal law. The case names Minnesota and state officials as defendants.
Kalshi sues Minnesota just over a week after the CFTC sued Minnesota. The CFTC suit was the day after @Tim_Walz signed a law that would effectively ban prediction markets in the state and is supposed to go into effect Aug. 1. @FOS story from last week:https://t.co/khVv6y1KNq https://t.co/11oy4ohUnw
— Ben Horney (@BenHorney) May 28, 2026
Kalshi filed its own challenge on Wednesday. The company said the Minnesota law conflicts with federal rules. It also cited the Supremacy Clause of the US Constitution. That clause gives federal law priority when state rules conflict.
Kalshi argues that the CFTC has “exclusive authority” over these markets. The company says its event contracts trade on a federally regulated market. It also says state bans could disrupt federal oversight. Minnesota’s court response will shape the next phase of the case.
CFTC moves against Rhode Island officials
The CFTC also moved in a Rhode Island case on Thursday. The agency announced a joint filing with Kalshi against state officials. The filing asked the court to allow the CFTC to intervene. It repeated the agency’s federal authority argument.
Rhode Island Attorney General Peter Neronha had sued Kalshi and Polymarket. The attorney general asked for a court declaration on sports event contracts. His case says those contracts amount to bets under state law. The platforms dispute that view.
Kalshi and the CFTC argue that event contracts are “swaps.” They say those products trade on designated contract markets. In their view, that brings them under CFTC oversight. State gambling laws, they argue, should not control those contracts.
The Rhode Island fight focuses on sports markets. Sports event contracts have drawn close attention from state regulators. State officials often treat sports wagering as a local matter. However, federal regulators say these contracts fit within commodity law.
Courts remain split over prediction markets
The legal record across states remains mixed. Some courts have rejected claims made by Kalshi and the CFTC. Other courts have accepted parts of their federal authority arguments. That split may push the issue toward the US Supreme Court.
At the center is the Commodity Exchange Act. Kalshi and the CFTC say it gives the agency control over listed event contracts. State officials argue that some markets look like gambling. The cases turn on how courts classify those contracts.
The Minnesota case is wider than the Rhode Island dispute. Minnesota’s law targets prediction market platforms more broadly. Rhode Island’s case focuses on sports-related event contracts. Still, both cases ask whether state law can limit federally regulated markets.
Prediction markets have grown in public attention during recent election and sports cycles. Platforms let users trade contracts tied to future events. Supporters describe them as regulated financial markets. Critics say some products resemble betting.
For crypto market readers, the cases matter because Polymarket is named in Rhode Island. The platform has become closely watched in digital asset circles. Kalshi, meanwhile, operates as a CFTC-regulated exchange. The lawsuits may affect how event contracts are offered across states.
The court fights are still at an early stage. Judges must decide whether federal law blocks the state actions. They may also address whether sports contracts fall under betting rules. Until then, prediction market platforms face a patchwork of legal risks.
