Minnesota Bans Prediction Markets, CFTC Sues

United States — Minnesota>>> has become the first US state to enact an outright ban on prediction markets, with Governor Tim Walz>>> signing a bill that criminalizes the hosting, operation, and advertising of platforms like Kalshi>>> and Polymarket>>> within the state. This law, set to take effect on August 1, has immediately drawn a lawsuit from the United States — United States Commodity Futures Trading Commission>>> (CFTC). The CFTC, under the Donald Trump>>> administration, argues that the state law violates the US Constitution by attempting to regulate derivatives markets that fall under its exclusive federal jurisdiction via the Commodity Exchange Act. CFTC Chairman Michael S. Selig>>> stated that the law turns lawful operators into felons overnight. United States — Minnesota>>> Attorney General Keith Ellison>>> is reviewing the lawsuit and plans to respond in court, citing concerns about the addictive nature and potential harms of prediction markets. This dispute is a significant jurisdictional turf war that will likely set a precedent for how prediction markets are regulated across the country, impacting both financial instruments and the crypto platforms that power them. The CFTC has previously sued other states, including United States — Arizona>>>, United States — Connecticut>>>, United States — Illinois>>>, United States — New York (state)>>>, and United States — Wisconsin>>>, over attempts to limit prediction market activities.