Kalshi Sues Minnesota, CFTC Files Against Rhode Island as Prediction Markets Legal Battles Continue

The US Commodity Futures Trading Commission (CFTC) and companies behind prediction market platforms are continuing legal fights against state-level authorities, with the latest battlegrounds centered in Rhode Island and Minnesota.

Last week, Minnesota Governor Tim Walz signed a bill into law amending statutes to prohibit advertising, creating, operating or otherwise facilitating prediction market platforms. The move prompted CFTC Chair Michael Selig to file in federal court less than 24 hours later, alleging Minnesota and its officials had enacted the “first outright ban” on prediction markets.

Source: PACER

That set up a move by Kalshi on Wednesday challenging the Minnesota law on constitutional grounds. The company echoed arguments made by Selig, claiming that the CFTC had “exclusive authority” over prediction markets under the Commodity Exchange Act and under the Supremacy Clause of the US Constitution, the federal law took precedence over state laws. 

Central to Kalshi’s and Selig’s claims is that event contracts on prediction market platforms are “swaps” traded on federally designated contract markets and subject to the CFTC’s jurisdiction rather than state authorities. Although some courts have rejected this argument, others have sided with Kalshi and the CFTC, setting up a potential case for the US Supreme Court.

Related: After Kalshi appeal, prediction markets fight could head to US Supreme Court

On Thursday, the CFTC announced a joint filing with Kalshi against Rhode Island officials. The motion to intervene reiterated the agency’s previous claims on its authority over prediction markets, stemming from Rhode Island Attorney General Peter Neronha suing Kalshi and Polymarket and asking for a declaration that the platforms’ sports-related “event contracts” amounted to bets.

Event contract on when a prediction markets case could go to the US Supreme Court. Source: Polymarket

Donald Trump weighs in, despite family ties to prediction markets

On Wednesday, US President Donald Trump took to social media, claiming that it was “critically important” that the CFTC had sole authority over prediction markets. His son, Donald Trump Jr., is an adviser to Kalshi and Polymarket and invested in the latter through his venture capital firm, 1789 Capital.

“We want to remain at the top,” said Trump, referring to prediction markets and insulting state officials behind some of the lawsuits against Kalshi and Polymarket.

The platforms have come under scrutiny in the US Congress amid concerns over elected officials potentially being engaged in insider trading. Last week, the chair of the House of Representatives’ Oversight and Government Reform Committee called on the CEOs of Kalshi and Polymarket to answer questions related to the companies’ response to insider trading.

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