Why is the CFTC suing Minnesota over prediction markets?

Commodity Futures Trading Commission sued Minnesota after the state passed a law banning prediction market platforms. The regulator argues that event contracts offered by firms like Kalshi and Polymarket fall under federal commodities law, not state gambling law.

What does Minnesota’s new prediction market law ban?

The law prohibits advertising, operating or facilitating prediction market platforms inside Minnesota starting Aug. 1. It specifically targets contracts tied to sports, military conflicts, weather events and other real-world outcomes that the state classifies as wagers.

Why does the CFTC say Minnesota’s law is unconstitutional?

The CFTC argues it has exclusive federal authority over event contracts under the Commodity Exchange Act. According to the agency, states cannot independently ban federally regulated prediction market products approved by the commission.

What are prediction markets?

Prediction markets allow users to trade contracts tied to the outcome of future events, such as elections, economic data or sporting results. Prices in these markets reflect collective expectations about the probability of an event occurring.

Why are Kalshi and Polymarket central to this dispute?

Kalshi and Polymarket are among the largest prediction market operators in the US. Minnesota’s law directly affects the kinds of contracts these platforms offer.

How could this lawsuit affect prediction markets across the US?

The case could determine whether states have the power to independently restrict prediction market platforms even when the CFTC permits them federally. A ruling in favour of the CFTC could strengthen federal control over the industry nationwide.

Why are states challenging prediction market platforms?

Some state regulators argue that contracts tied to sports and event outcomes resemble gambling products rather than financial derivatives. Officials in several states have raised concerns over sports betting, consumer protection and unlicensed wagering.

What is Michael Selig’s role in the dispute?

Michael Selig currently serves as the acting head of the CFTC. He has repeatedly stated that the agency would challenge state-level actions targeting federally regulated prediction markets.

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CFTC sues Minnesota over prediction market ban

Written by Jon CuthbertPublished May. 20 2026Last Updated May. 20 2026

Commodity Futures Trading Commission has sued the state of Minnesota and Governor Tim Walz after lawmakers approved what the agency described as the first outright state ban on prediction markets in the United States.

The lawsuit followed Walz signing Senate File 4760 into law on Monday, prohibiting the advertising, operation and facilitation of prediction market platforms across Minnesota beginning Aug. 1.

The law classified contracts tied to sporting events, military conflicts and weather outcomes on platforms such as Kalshi and Polymarket as prohibited wagers under state law.

“If permitted to go into effect, Minnesota law will criminalise exchanges that the Commission has expressly approved,”

The CFTC said in its court filing.

The regulator argued that prediction market event contracts fall under federal commodities law as swaps regulated exclusively by the CFTC under the Commodity Exchange Act, meaning state-level bans conflict with federal authority.

CFTC Chair Michael Selig has repeatedly warned that the agency would challenge state actions targeting prediction market operators, while similar disputes have already emerged in Ohio, Connecticut, Illinois and New York.

The legal clash comes as Minnesota simultaneously expands parts of its crypto framework, with Walz recently signing legislation allowing state-chartered banks and credit unions to provide certain virtual currency custody services beginning Aug. 1, while also approving restrictions targeting crypto ATMs and kiosks linked to fraud complaints.