The CFTC argues that Minnesota's ban undermines a federal regulatory framework established by Congress more than 50 years ago
Bloomberg / Getty Images
The Commodity Futures Trading Commission has filed a lawsuit against Minnesota to block a new state law that would make operating or assisting in the operation of a prediction market a criminal felony. Through the lawsuit, the agency wants a federal court to halt enforcement of the law before its Aug. 1, 2026 effective date.
CFTC Chairman Michael Selig said in a statement that the law "turns lawful operators and participants in prediction markets into felons overnight." Selig also took aim at the governor directly, saying "Governor Walz chose to put special interests first and American farmers and innovators last," and noting that farmers across the state have long depended on hedging instruments tied to weather and crop events.
Among all state-level efforts to curtail prediction markets, the CFTC characterized Minnesota's law as the most sweeping, saying no other state measure it has challenged goes as far — including its explicit criminalization of weather-related event contracts. The agency noted that Minnesota is one of the largest agricultural producers in the U.S.
The CFTC argued in the lawsuit that Minnesota's law violates the U.S. Constitution by criminalizing at the state level the operation of derivatives markets governed by federal law, according to Reuters.
Minnesota Attorney General Keith Ellison said his office was reviewing the lawsuit and would respond in court. "Prediction markets are designed to be addictive and prey especially on young people and low-income folks," Ellison said, according to Reuters. "They help the ultra-rich get richer and the rest of us get poorer."
Minnesota is the first state to sign off on an outright ban on prediction markets, according to Business Insider. Under the legislation, wagers across a wide range of categories — including sports, weather, popular culture events, war, and death — would be prohibited on platforms like Kalshi and Polymarket, according to CBS News.
Responding to the lawsuit, Kalshi spokesperson Elisabeth Diana called the ban "unenforceable" and said it was "a terrible idea for the citizens of Minnesota because it reduces competition and drives activity offshore." In a separate statement cited by Reuters, a Polymarket spokesperson said the CFTC's legal action showed that Minnesota's measure "runs counter to the federal government's established framework for regulating prediction markets."
Arizona, Connecticut, Illinois, and New York have all faced CFTC lawsuits over their attempts to crack down on prediction market operators. In the Arizona case, a court sided with the agency and issued a preliminary injunction barring the state from bringing criminal prosecutions against prediction market operators, the CFTC said.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
