Kalshi Sues Minnesota to Block SF 3432 Prediction Market Ban

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Fri May 29, 2026, 7:00 am ET

Read Time: 4 minutes

Kalshi Sues Minnesota to Block SF 3432 Prediction Market Ban

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Kalshi has filed a federal lawsuit against Minnesota in an effort to stop the enforcement of SF 3432. The company argues the legislation unlawfully targets federally regulated prediction markets.

The lawsuit marks another major clash between state lawmakers and prediction market operators. It also adds pressure to the broader debate surrounding sports event contracts and financial regulation.

Kalshi filed the complaint in the US District Court for the District of Minnesota. The exchange seeks injunctive relief before the law takes effect on August 1, 2026.

The company maintains that the Commodity Futures Trading Commission exclusively regulates its markets. Therefore, Kalshi argues Minnesota cannot prohibit contracts already approved under federal law.

The legal battle could affect the future of prediction markets nationwide. It may also influence how US online sportsbooks and state regulators approach event-based contracts moving forward.

SF 3432 Targets Broad Event Contracts Across Minnesota

SF 3432 establishes sweeping restrictions against prediction market platforms operating in the state. The bill broadly targets event contracts tied to sports, politics, weather, agriculture, and other real-world outcomes.

Under the legislation, companies cannot offer, facilitate, advertise, or promote prediction market products within Minnesota. Violators could face civil penalties and enforcement actions from state authorities.

Minnesota lawmakers argue prediction markets closely resemble gambling products already regulated under state gaming laws. However, critics warn the legislation reaches far beyond sports-related contracts.

The broad language within SF 3432 has raised concerns across financial markets because it could affect federally regulated derivatives products. That concern partly explains why the Commodity Futures Trading Commission became involved in the dispute.

Critics also note that traditional financial exchanges, including the Chicago Mercantile Exchange, offer contracts tied to weather and agricultural outcomes. As a result, opponents argue the bill creates potential conflicts with federal commodities law.

Importantly, SF 3432 connects directly to SF 4760, explicitly repealing and replacing that bill's provisions about prediction markets. SF 3432 corrected the latter's broad language that faced immediate federal pushback.

The legislation arrives as several states increase scrutiny against prediction market operators. Regulators across the country continue debating whether these products qualify as gambling or federally regulated financial instruments.

Kalshi Names Governor Tim Walz and State Officials in Lawsuit

Kalshi argues SF 3432 violates federal law because the Commodity Exchange Act grants exclusive oversight authority to the CFTC.

According to the lawsuit, Minnesota cannot criminalize or prohibit federally regulated derivatives trading platforms. Kalshi claims the state law directly conflicts with federal financial regulations.

The lawsuit names Minnesota Governor Tim Walz, Attorney General Keith Ellison, and Jon Anglin, Director of the Alcohol and Gambling Enforcement Division, as defendants. Kalshi seeks a court order preventing officials from enforcing the law.

The company also argues the legislation threatens innovation within regulated prediction markets. Furthermore, Kalshi claims the state is attempting to regulate products outside its legal authority.

Kalshi previously challenged similar state actions in other jurisdictions. However, Minnesota's legislation represents one of the strongest statewide crackdowns against prediction markets to date.

The dispute could create broader implications for US online sportsbooks and financial exchanges offering event-based contracts.

Minnesota Attorney General Defends State's Position

Minnesota Attorney General Keith Ellison strongly criticized prediction market operators following the lawsuit.

"I'm very concerned about the harms of prediction markets on Minnesotans. Prediction markets are designed to be addictive and prey especially on young people and low-income folks. They help the ultra-rich get richer and the rest of us get poorer. My office and I are reviewing this lawsuit and will respond in court."

Ellison's comments reflect growing concerns among state officials regarding consumer protection and gambling addiction risks.

Minnesota lawmakers continue arguing prediction markets function similarly to gambling products. Therefore, they believe state regulators should oversee those activities instead of federal commodities agencies.

Minnesota Gambling Regulators Continue Aggressive Push Against Prediction Markets

The current Minnesota gambling environment remains highly restrictive compared to other states. Minnesota has not legalized statewide online sports betting despite several legislative attempts.

At the same time, lawmakers have intensified efforts against unregulated gambling products and offshore operators. Prediction markets have become a major focus within those discussions.

Minnesota legislators now stand among the country's most aggressive opponents of prediction markets. State officials argue these platforms undermine existing gambling laws and consumer safeguards.

The state's actions also reflect a broader national movement against event-contract exchanges. Several states have recently launched investigations, cease-and-desist orders, and lawsuits targeting similar operators.

Meanwhile, prediction market companies continue defending their platforms as federally regulated financial products. That growing conflict now places Minnesota at the center of one of the gambling industry's most important legal battles.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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