Prediction Market Ban: U.S. CFTC Sues Minnesota To Block State Law Banning Polymarket, Kalshi

The U.S. Commodity ​Futures ​Trading Commission (CFTC) has sued Minnesota to block a state law that Governor Tim Walz recently signed, instituting a prediction market ban. This marks the latest lawsuit that the Commission has brought against U.S. states as it seeks to protect its exclusive jurisdiction over platforms such as Polymarket and Kalshi.

CFTC Sues Minnesota To Block Prediction Market Ban

In a press release, the Commission announced that it filed a lawsuit against Minnesota to block a new state law that Governor Walz signed, which would make operating or assisting in the operation of a prediction market a criminal felony. The CFTC is seeking a preliminary injunction to prevent the law from taking effect on August 1, 2026.

The CFTC noted that Minnesota is one of the largest agricultural producers in the country. Yet, the state government enacted a law to enforce a prediction market ban that impacts many CFTC-regulated markets and has a broader reach than any other state the Commission has sued to date.

“The new legislation represents the most aggressive move by a state to shut down CFTC-regulated markets and undermine the federal regulatory regime set up by Congress more than 50 years ago,” the CFTC said. Notably, following Governor Tim Walz’s assent to the bill, Minnesota became the first U.S. state to bank on prediction markets. Governor Walz also signed a bill to permit crypto custody services, as CoinGape reported.

CFTC Chair Criticizes Governor Walz

CFTC Chair Michael Selig criticized Governor Walz for putting special interests first above American farmers and innovators with the prediction market ban. This came as he noted that Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks.

It is worth noting that the CFTC has sued Arizona, Connecticut, Illinois, and New York, where state regulators have moved to crack down on top crypto prediction market platforms such as Polymarket. In the Arizona lawsuit, a federal court issued a preliminary injunction barring the state from criminally prosecuting the prediction-market platform Kalshi.

Commenting on the Minnesota prediction market ban, Kalshi’s Head of Communications, Elisabeth Diana, described the move as “Peak hypocrisy.” She noted that the state is banning prediction markets while its government collects millions of dollars a year from slot machines, poker games, roulette tables, and casino games.

Peak hypocrisy: MN banning prediction markets while its gov’t collects millions a year from slot machines, poker games, roulette tables, and casino games. Does anyone believe that casinos are safe and well-regulated, but CFTC-registered exchanges and clearinghouses are not? https://t.co/bzfLSpObXp

— Elisabeth Diana (@ediyork) May 13, 2026