Parties of ethno-regional minorities have been created in a large number of ethnically diverse countries, but sometimes one such party is not enough. While previous work has investigated the consequences of intragroup party competition, this study looks at the causes of internal political diversification of minority groups. In states with multiple levels of governments, intra-ethnic rival parties emerge if minorities are local majorities in certain regions. Intra-ethnic party competition is limited, however, through the national electoral system, and especially high legal thresholds can restrict minority parties. This results in complex interaction terms of the territorial settlement structure of ethnic minorities and different types of electoral systems. The empirical analysis relies on Boolean Algebra (csQCA) and on a new cross-national dataset of 19 postcommunist democracies in Europe, counting 123 ethnic minorities.