CFTC and DOJ sue to block Minnesota prediction market ban

The U.S. Commodity Futures Trading Commission, joined by the Department of Justice, has filed a lawsuit seeking to block Minnesota from enforcing a new state law that bans prediction markets. The federal complaint was filed in a U.S. district court one day after Governor Tim Walz signed the legislation, which is scheduled to take effect on August 1.

The law, known as Senate File 4760, makes it a felony to operate, host, advertise, or otherwise facilitate a prediction market platform within Minnesota. These platforms, such as Kalshi and Polymarket, allow users to trade contracts based on the outcomes of future events, including sports, elections, economic indicators, and weather. State legislators supporting the measure have characterized these activities as unregulated gambling that poses risks to consumers.

In its lawsuit, the CFTC argues that the state ban unlawfully interferes with federal regulatory authority. The agency contends that event contracts traded on these federally regulated platforms are derivatives that fall under its exclusive jurisdiction, as established by the Commodity Exchange Act. The complaint states that Minnesota’s law would criminalize activity on...