CFTC Signals Minnesota Could Be Next in Prediction Market Regulation Battle

The Commodity Futures Trading Commission (CFTC) is keeping close watch on Minnesota as legislators there advance a bill that could restrict or outright ban prediction markets, a person familiar with CFTC Chair Mike Selig's thinking told Semafor.  

Selig has already filed lawsuits against five states that moved to crack down on prediction market platforms, and Minnesota's legislative activity has put it squarely on his radar. 

The regulator’s posture has been bolstered by favorable court outcomes. A federal district judge recently blocked Arizona from taking legal action against Kalshi, a ruling Selig cited as reaffirming the CFTC's full jurisdiction over these markets. That came shortly after a federal appeals court sided with Kalshi over New Jersey, a decision the prediction market industry views as a potential stepping stone toward Supreme Court review. 

Selig's position rests on the argument that prediction market participants are trading event contracts rather than placing bets, making the CFTC the proper regulatory body compared to state gambling commissions. The CFTC has framed state-led enforcement as creating a fragmented regulatory landscape that undermines federal oversight. 

On Capitol Hill, the debate is also moving in multiple directions. Sen. Dave McCormick and Sen. Kirsten Gillibrand have introduced a bill that would update the CFTC's statutory authority to better accommodate prediction markets. 

A separate bipartisan proposal from Sen. Adam Schiff and Sen. John Curtis would bar prediction market platforms from accepting wagers on sporting events. There is also momentum in the House toward prohibiting members of Congress and their staff from using prediction market platforms altogether. 

CFTC Takes Federal Case Directly to Wisconsin Over Kalshi Crackdown 

Minnesota is not the only state drawing federal scrutiny. The CFTC's litigation pattern is already in full swing, with Wisconsin becoming the most recent state to face a federal countersuit. 

Wisconsin filed civil actions against Coinbase, Crypto.com, Kalshi, Polymarket, and Robinhood. The action alleges that the sports-event contracts they provide constitute illegal wagering under Wisconsin law. 

Wisconsin Attorney General Josh Kaul filed three civil lawsuits in Dane County Circuit Court on April 23 against the platforms, contending that sports-outcome contracts constitute a Class I felony under state law. Court filings reveal that Kalshi earns more than 90% of its total revenue from sports contracts. 

The CFTC subsequently filed its action, requesting that the court block state enforcement and declare Wisconsin's lawsuits against the companies to be unconstitutional under the Supremacy Clause.  

“States cannot circumvent the clear directive of Congress,” said Selig in a statement. “Our message to Wisconsin is the same as to New York, Arizona and others: if you interfere with the operation of federal law in regulating financial markets, we will sue you.” 

Wisconsin is now the fifth state sued by the CFTC in roughly a month, joining Arizona, Connecticut, Illinois, and New York.