CFTC files lawsuit against Minnesota over prediction markets ban
Federal agency takes legal action after Governor Tim Walz signed legislation to make operating or assisting event contracts a criminal felony
The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Minnesota after the state passed legislation banning and criminalising prediction markets.
The move marks the latest action against a state from the derivatives regulator, following the lawsuits filed against regulators in Connecticut, Illinois and New York.
On 18 May, Minnesota Governor Tim Walz signed an anti-prediction markets bill into law as part of a wider public safety bill.
The new legislation, set to come into effect from 1 August, would criminalise the creation or operation of prediction market platforms.
This extends to facilitating transactions, providing geolocation services, processing payments, or the provision of data used to settle event contracts.
The law pertains to a wide range of event contracts, including those concerning sporting events and esports, games of skill, elections, legal proceedings and public health issues.
Contracts covering natural disasters, terrorism, mass casualty events, weather conditions, entertainment outcomes and individual statements are also prohibited.
The bill also prevents the marketing of any products that promote prediction market trades.
However, the CFTC, which is seeking a preliminary injunction to prevent the law from taking affect by the August deadline, heavily criticised Walz for trying to ban weather-related contracts, while making no reference to sports event contracts.
According to a recent prediction markets report produced by boutique analyst firm Eilers & Krejcik Gaming, sports contracts account for approximately 90% of total trading volumes in the US.
A CFTC statement said: “Minnesota is one of the largest agricultural producers in the United States. The Minnesota government has nonetheless enacted a state law criminalising trading in many CFTC-regulated markets with a broader reach than any other state the CFTC has sued to date, including criminalising weather-related event contracts.
“The new legislation represents the most aggressive move by a state to shut down CFTC-regulated markets and undermine the federal regulatory regime set up by Congress more than 50 years ago.”
Minnesota is one of 11 US states with no legal form of sports betting. Attempts to pass online sports betting laws during the 2026 legislative session failed to get off the ground.
CFTC chair Michael Selig also accused Walz of ignoring the needs of the citizens of the North Star State.
He added: “This Minnesota law turns lawful operators and participants in prediction markets into felons overnight.
“Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last.”
As well as the lawsuits filed against various states, the CFTC intervened to stop Arizona regulators from pursuing a criminal case against Kalshi last month.
Several states have taken legal action against prediction market platforms in recent months.
Regulators in Washington, Michigan and Ohio have hit the likes of Kalshi and Polymarket with either preliminary injunctions or fines for what they allege is the promotion of unlicensed sports betting products.