CFTC Takes Minnesota to Court Over New Law Banning Prediction Markets

The CFTC has sued Minnesota in response to lawmakers passing legislation that would effectively ban certain prediction markets from operating in the state

Ziv Chen

Last Updated: May 22, 2026 11:34 AM EDT • 3 minute read

Pictured: The flag of the U.S. state Minnesota is seen in this illustration as we look at the battle before the state and the CFTC over prediction markets. Photo by REUTERS/Dado Ruvic/Illustration

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Minnesota became the latest flashpoint in the national fight over prediction markets this week after Gov. Tim Walz signed a bill into law Monday that bans platforms like Polymarket and Kalshi from operating within the state.

The bipartisan legislation passed with commanding margins, clearing the state Senate 57-9 and the House 100-32. Under the law, which is set to take effect Aug. 1, running or advertising prediction market apps in Minnesota would constitute a felony, though the measure does not hold individual users accountable.

The Commodity Futures Trading Commission (CFTC) moved quickly in response, filing a suit against Minnesota on Tuesday and seeking a preliminary injunction to block the law before it kicks in. The agency's core argument is that federal law has governed derivatives markets for over five decades and that state gambling statutes cannot override that authority.

The CFTC specifically pointed to weather-related contracts, which some farmers use to hedge against crop losses from poor growing seasons, as a category the law would improperly criminalize.

The bill's author, state Rep. Emma Greenman, pushed back on that framing, noting that the final version of the law contains explicit carve-outs protecting those types of agricultural contracts. She also accused the CFTC of failing to adequately regulate the industry itself before launching the legal challenge.

Minnesota Attorney General Keith Ellison confirmed his office is reviewing the federal complaint and intends to respond in court. The CFTC has filed similar lawsuits against Arizona, Connecticut, Illinois, and New York.

CFTC targets Wisconsin following lawsuit

Minnesota is far from the only state to find itself in the CFTC's crosshairs. Roughly three weeks earlier, the same dynamic played out in Wisconsin, offering a preview of what the legal fight in Minnesota may look like going forward.

In late April, Wisconsin's attorney general sued five prediction market operators, including Kalshi, Polymarket, Coinbase, Robinhood, and Crypto.com, for allegedly operating illegal sports betting under state law.

The CFTC responded within days by filing its own lawsuit against the state in federal court in Wisconsin, alongside the Justice Department's Civil Division. The agency argued that event-based contracts traded on federally designated exchanges fall squarely under its exclusive oversight and that Wisconsin's gambling laws have no bearing on them.

CFTC Chairman Michael Selig warned that any state attempting to enforce its own rules over federally regulated financial markets would face legal action. Wisconsin Attorney General Josh Kaul was unsparing in his response, calling the federal suit an overreach and noting that a bipartisan coalition of state attorneys general has lined up against the jurisdictional position the CFTC is staking out.

A potentially meaningful development emerged in Arizona, where a court paused that state's criminal case against Kalshi after a judge concluded that the CFTC is likely to prevail on the preemption question. That ruling could influence how courts in Wisconsin and Minnesota ultimately weigh in as the debate continues.

Written by:
Ziv Chen

Ziv has over two decades of experience in the igaming and sports betting industry, having served in senior marketing and business development positions with both B2C and B2B companies, including Playtech and Microgaming. In 2019, Ziv decided to pursue his passion for writing and became a fulltime industry journalist, covering casino, sports, and gambling business news. He’s specialties include casino games and technology, US state gambling regulation, company performance, as well as gambling affiliates and marketing. As a Pitt graduate, Ziv is a diehard fan of all Pittsburgh sports teams, with the Steelers at the top of the list. In his free time, he enjoys reading crime fiction, biographies (mainly of sports personalities, but not only) and American history. Ziv’s Favorite quote: “We're going to pursue perfection, knowing full well we won't catch it, but we're going to relentlessly chase it," Mike Tomlin, Pittsburgh Steelers Head Coach.