Kalshi has filed a lawsuit in the U.S. District Court for the District of Minnesota seeking to block the state's newly passed ban on prediction markets. The law, which will take effect on August 1, classifies the creation, operation, or promotion of prediction markets as a felony.

The controversy centers on the jurisdiction of the regulator.

Many local governments, including those in Democratic and Republican states, believe that prediction markets surrounding sports events, political events, and even entertainment topics are essentially gambling and should be regulated by each state.

Kalshi argues that these products fall under the category of "event contracts" and should be uniformly regulated by the federal CFTC. In his lawsuit, Kalshi claims that the Minnesota injunction would directly criminalize businesses permitted under federal law.

Federal agencies have filed a preliminary lawsuit.

Just hours after Minnesota passed the ban, the U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) also sued the state, claiming that the law illegally infringed on federal regulatory authority.

The CFTC has previously filed numerous lawsuits against other states that have attempted to restrict prediction markets. This dispute has escalated from a single state law issue to a conflict of regulatory authority between state governments and federal agencies.

The Trump family's connections with industry are attracting attention.

The Trump administration has recently continued to support prediction market platforms. Kalshi's lawsuit aligns with the position of federal agencies, with its core claim being to prevent Minnesota from classifying federally licensed businesses as state felonies.

Public information shows that Donald Trump Jr., Trump's eldest son, serves as an advisor to Kalshi and Polymarket, and is also an investor in Polymarket. Trump's own recent public statements regarding prediction markets have also shown some changes.