CFTC sues to block Minnesota's first-in-nation ban on prediction markets [View all]

Source: Reuters

May 19, 2026 12:51 PM EDT Updated 4 hours ago


May 19 (Reuters) - The U.S. Commodity Futures Trading Commission on Tuesday filed a lawsuit seeking to block Minnesota from enforcing a newly enacted ​law that made the state the first nationally to outright ban prediction ‌markets like those run by Kalshi and Polymarket.

The federal regulator filed the lawsuita day after Minnesota Governor Tim Walz, a Democrat, signed into law a measure that starting on August 1 would make ​it a crime to operate, host or promote a prediction market in the ​state. Such platforms, which allow users to profit from predictions on events such as ⁠sports and elections, are at the center of a battle over the power ​of state gaming regulators to police the multi-billion-dollar prediction market industry.

Kalshi, which in a recent ​funding round was valued at $22 billion, in particular has been fighting a series of court cases involving states who claim it is running an illegal, unlicensed wagering operation that allows adults under 21 to gamble. Under ​President Donald Trump's administration, the CFTC has shared the companies' position that the event ​contracts users can trade on their prediction markets fall exclusively under the agency's jurisdiction to regulate "swaps," a ‌type ⁠of derivative contract.

In Tuesday's lawsuit, the CFTC argued that Minnesota's novel law violated the U.S. Constitution by criminalizing at the state level the operation of derivatives markets governed by federal law. "This Minnesota law turns lawful operators and participants in prediction markets into felons ​overnight," CFTC Chairman Michael ​Selig said in a ⁠statement. A spokesperson for Minnesota Attorney General Keith Ellison, a Democrat, said his office "is reviewing the filing and will respond in court ​when appropriate."

Read more: https://www.reuters.com/world/us-cftc-sues-minnesota-block-law-related-prediction-market-2026-05-19/