CFTC sues Minnesota over its blanket ban on prediction markets

Odaily reported that the U.S. Commodity Futures Trading Commission (CFTC) and the Department of Justice have filed a lawsuit against the state of Minnesota and Governor Tim Walz, opposing the state's newly signed ban on prediction markets.

The new Minnesota law, set to take effect on August 1, prohibits users from engaging in prediction market trading related to outcomes in sports, weather, company valuations, and government events. In the lawsuit, the CFTC stated this is the first state-level law in the U.S. to explicitly impose a comprehensive ban on prediction markets.

The CFTC and the Department of Justice argue that the relevant products fall under federally regulated derivatives and "swap" contracts, over which the CFTC holds exclusive regulatory authority, and that state governments are not permitted to classify them as illegal gambling or prohibit them.

This lawsuit further escalates the jurisdictional conflict between federal regulators and state-level gambling oversight authorities. Previously, the CFTC had sued states such as Illinois, Arizona, and Connecticut to oppose their attempts to shut down prediction market platforms like Kalshi and Polymarket.