Minnesota Bans Prediction Markets-CFTC Fires Back in Epic Legal Showdown!

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Minnesota bans prediction markets, CFTC fires back

The Commodity Futures Trading Commission (CFTC) is taking Minnesota to court to challenge a new state law. This law, set to take effect August 1st, would prohibit prediction markets. The lawsuit will likely focus on whether states can regulate these markets or if that authority belongs to the federal government.

Summary

  • CFTC sued Minnesota one day after Walz signed the nation’s first outright prediction markets ban.
  • The regulator wants an injunction before Aug. 1, when the new state law starts there.
  • Minnesota allows bank custody while banning crypto kiosks from August onward statewide.

On May 19th, the Commodity Futures Trading Commission sued to block a new Minnesota law. The law, signed by Governor Tim Walz the previous day, would make running or assisting with prediction markets a crime. The Commission is asking the court for a temporary halt to the law before it takes effect on August 1st.

CFTC Chair Michael Selig spoke out against a new Minnesota law, calling it problematic in a recent agency statement. He explained that the law unexpectedly makes legal prediction market activities criminal offenses. The agency also noted that the law impacts many markets it oversees, including those focused on weather events.

Minnesota targets prediction market activity

A new Minnesota law aims to stop people from betting on the outcomes of future events like sports games, elections, or even the weather. According to Reuters, operating, hosting, or advertising these types of betting markets will be illegal in Minnesota starting August 1st.

The Commodity Futures Trading Commission (CFTC) believes these contracts are considered derivatives and therefore under its federal control. The agency claims a Minnesota law clashes with the existing federal rules for markets the CFTC oversees. According to Reuters, Minnesota Attorney General Keith Ellison stated his office is examining the situation and will present a response in court.

As I’ve been following the developments, it’s become clear that Kalshi and Polymarket are increasingly under scrutiny from state regulators. Recent reports, like one from Reuters, indicate Kalshi is currently involved in multiple legal battles at the state level, with the core of the dispute being whether their event contracts constitute illegal betting.

Following the lawsuit, Kalshi spoke out against Minnesota’s law, with a spokesperson telling Reuters it was impossible to enforce and would likely move this type of activity to other countries. Polymarket agreed, stating the law clashes with the existing federal rules for prediction markets.

Minnesota moves on wider crypto rules

Minnesota is becoming more involved with cryptocurrency. Governor Walz recently approved a new law, HF 3709, which allows banks and credit unions in the state to securely hold virtual currencies for customers starting August 1st.

Minnesota is also prohibiting virtual currency kiosks, according to the same report. Governor Walz signed the bill (SF 3868) into law on May 5th. The ban takes effect August 1st, and all public kiosks must be removed by December 31st.

Prediction markets move further into finance

Prediction markets are growing beyond just politics and sports. Recently, Polymarket teamed up with Nasdaq Private Market to create markets focused on private companies – things like when they’ll hit certain valuation goals, go public, or have activity in secondary markets.

This development makes the Minnesota lawsuit important for any company involved in crypto trading. The court will decide if Minnesota can consider prediction markets as illegal gambling, or if federal law regarding financial derivatives prevents the state from banning them.

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2026-05-20 08:24