Kalshi, a prediction market platform, has sued Minnesota over state restrictions on event-based trading. Separately, the Commodity Futures Trading Commission (CFTC) filed an action against Rhode Island over its own prediction market rules. The two legal battles, playing out in different courts, both center on who gets to regulate contracts that let users bet on the outcome of elections, sports, and other events.
The lawsuits in detail
Kalshi's complaint challenges Minnesota's efforts to block the company from offering contracts to state residents. The company argues that federal law preempts state-level bans on prediction markets. In Rhode Island, the CFTC is taking the opposite tack — suing the state for what the agency sees as interference with federal oversight of derivatives markets. The CFTC claims Rhode Island's rules conflict with its own authority under the Commodity Exchange Act.
Kalshi is based in New York and operates a federally regulated exchange. It has clashed with state regulators before, but this is its first direct lawsuit against a state over prediction market regulations. The CFTC action against Rhode Island marks a rare move by a federal agency to challenge state-level financial rules.
Why the disputes are heading toward the Supreme Court
Both cases raise the same constitutional question: can states impose their own restrictions on products that the CFTC already regulates? Lower courts have reached different conclusions in similar fights, and legal analysts expect at least one of these disputes to climb the appellate ladder. The Supreme Court has never ruled directly on the balance of power between federal commodities regulators and state authorities over prediction markets.
Kalshi's suit was filed in federal court in Minnesota. The CFTC action against Rhode Island landed in a U.S. district court in Providence. Neither case has a hearing date set yet, but both could move quickly given the overlapping legal issues.
The outcome matters beyond the two states. Prediction markets for events like election results and economic data have grown in popularity, and operators want a single national rulebook. States like Minnesota and Rhode Island — along with several others — argue they have the right to protect consumers from gambling-like products. The courts will have to decide which side wins.
