CFTC Sues Minnesota to Stop New Law Targeting Prediction Markets

TLDR

• CFTC sued Minnesota to block a law targeting prediction markets.
• The agency wants a preliminary injunction before the Aug. 1, 2026 start date.
• Minnesota’s law would make operating, assisting, or advertising prediction markets a felony.
• The CFTC says federal law gives it exclusive authority over these regulated markets.
• The dispute centers on whether prediction markets are federally supervised event contracts or unlawful wagering under state law.

The Commodity Futures Trading Commission has filed a lawsuit against the State of Minnesota to stop a new law that would make operating or helping to operate a prediction market a criminal felony. The federal agency asked a U.S. district court to issue a preliminary injunction before the law is scheduled to take effect on Aug. 1, 2026.

According to the complaint, the CFTC argues that Congress gave the agency exclusive authority over commodity futures and event contract markets under federal law. The agency said Minnesota’s measure would interfere with that framework by criminalizing activity tied to prediction markets that fall under federal oversight.

The state law was approved by the Minnesota Senate in a 56-10 vote and signed by Governor Tim Walz on Monday, according to reports cited in the filing coverage. The legislation would ban most wagers placed through prediction market platforms such as Kalshi and Polymarket. It also makes it a felony to create, operate, assist, or advertise such platforms in Minnesota.

Federal Agency Says State Law Conflicts With Existing Authority

In court filings, the CFTC described Minnesota’s action as the broadest state attempt so far to shut down CFTC-regulated prediction markets. The agency said the law goes beyond other state measures it has challenged because it would also criminalize certain weather-related event contracts. Those contracts, the agency said, have long been used in agricultural risk management.

CFTC Chairman Michael S. Selig said the law would make lawful operators and users of prediction markets into felons once it takes effect. He also said Minnesota farmers have relied on weather and crop-related contracts for decades to manage business risk. Minnesota is one of the largest agricultural producers in the United States, and the agency pointed to that fact in arguing that the state law reaches beyond election or sports-style contracts.

The lawsuit continues a wider legal dispute over who controls the regulation of prediction markets in the United States. The CFTC has maintained in cases around the country that it has exclusive jurisdiction over these products when they are offered as regulated event contracts. States and tribal gaming interests have challenged that position, while prediction market firms have argued that their products are federally supervised rather than forms of unauthorized gambling.

Minnesota Law Targets Wide Range of Event Contracts

The Minnesota measure covers wagers on topics including sports, weather, war, death, and popular culture events, based on the bill descriptions cited in media reports. Supporters of the law said the platforms resemble unregulated gambling operations and may invite conduct similar to insider trading if traders have access to nonpublic information about the events being traded.

That concern has gained attention in recent months. Reports tied to the debate said nine connected Polymarket accounts made nearly $2.5 million trading on U.S. military actions, including contracts linked to the timing of strikes on Iran and the announcement of a ceasefire. Another report said prosecutors last month charged a soldier with using insider information to place a bet related to the capture of Venezuela’s Nicolas Maduro.

Minnesota has also seen its own case involving prediction market activity by a public official. Kalshi barred a lawmaker from its platform after he placed a wager on winning his own primary. Supporters of the state ban have cited cases like these in arguing that event markets require tighter limits at the state level.

Broader Fight Over Kalshi, Polymarket and Market Access

The CFTC’s suit against Minnesota adds the state to a group of Democrat-led states that have already faced legal action tied to prediction market restrictions, including Arizona, Connecticut, Illinois, and New York. The agency is asking the court to block Minnesota from enforcing the measure while the case proceeds.

Minnesota law currently allows gambling at horse racetracks and tribal casinos, but sports betting has not been legalized in the state. Prediction markets, however, have been available across all 50 states through platforms operating under claims of federal regulatory coverage.

That difference sits at the center of the lawsuit, with the state treating the activity as unlawful wagering and the CFTC arguing that at least some of the contracts fall under federal commodities law. The Minnesota attorney general’s office told one outlet that it is reviewing the filing and will respond in court.

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