CFTC Sues Minnesota, Says Prediction Market Ban Violates Federal Law

The Commodity Futures Trading Commission has sued Minnesota after the state enacted a law banning prediction market platforms.

Cointelegraph reported on May 19 that the CFTC asked a federal court in Minnesota to block enforcement of the state law. The complaint names the state, Governor Tim Walz and Attorney General Keith Ellison as defendants.

Walz signed the bill, SF 4760, on May 18. The measure bars the advertising, operation and support of prediction market platforms and is scheduled to take effect on Aug. 1.

The law effectively treats event contracts tied to sports games, military conflicts and weather on platforms including Kalshi and Polymarket as gambling bets.

The CFTC argues that prediction market event contracts qualify as swaps under the Commodity Exchange Act and fall under the agency's exclusive jurisdiction.

In its complaint, the agency said Minnesota's law would criminalize not only CFTC-approved exchanges but also event contracts that completed self-certification if the measure takes effect. It said that would directly interfere with federal interests in enforcing federal law.

The CFTC is currently operating with only Acting Chairman Michael Selig after President Donald Trump did not nominate additional commissioners. Selig has repeatedly signaled that the agency would take legal action against state-level regulation of prediction markets.

Minnesota has also recently pushed ahead with crypto-related regulation. Walz signed a bill on May 16 allowing banks and credit unions in the state to provide digital-asset custody services. Earlier this month, the state also passed a bill restricting crypto kiosks and ATMs.