Overview
- Minnesota’s SF 3432, signed by the governor and set to take effect on August 1, creates felony penalties for operating, supporting, marketing, or advertising prediction market contracts tied to elections, sports, wars, public figures, and other future events.
- The Commodity Futures Trading Commission has already challenged state bans in federal court, arguing that the Commodity Exchange Act gives the agency exclusive jurisdiction over event contracts listed on designated contract markets and that state criminal laws are preempted.
- Kalshi filed a federal lawsuit seeking emergency relief on May 27 to block Minnesota’s law and asked the court to declare the statute invalid as applied to its federally regulated exchange.
- In its complaint Kalshi argues the law violates the Constitution by usurping CFTC authority under the Supremacy Clause and by criminalizing advertising in breach of the First Amendment, and it cites recent preliminary injunctions won in New Jersey and Arizona as support.
- A proposed CFTC rule is under White House review and President Trump has publicly backed CFTC control, so the dispute could be resolved by federal rulemaking or by appeals that may reach the Supreme Court and that would affect platform operations and state enforcement nationwide.