CFTC sues Minnesota over its comprehensive ban on prediction markets

Odaily Odaily reports 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 transactions based on outcomes of 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 and comprehensively ban prediction markets.

The CFTC and Department of Justice argue that the relevant products are federally regulated derivatives and "swap" contracts, over which the CFTC should have exclusive regulatory authority. Therefore, state governments lack the power to classify them as illegal gambling or prohibit them.

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