This week, Minnesota became the first state in the country to ban prediction markets—and hours later, the Commodity Futures Trading Commission and Department of Justice sued the state over the prohibition, claiming it was illegal.
The whipsaw turn of events marks the latest escalation in an all-out jurisdictional war between states and the Trump administration over the fate of prediction markets platforms like Kalshi and Polymarket.
The conflict is likely to ultimately be decided by the U.S. Supreme Court.
“If Minnesota’s law is permitted to go into effect, the exchanges that offer these longstanding contracts—as well as those who partner with them—can be prosecuted as felons,” the complaint reads. “This flagrant and unprecedented incursion into the Commission’s exclusive regulatory sphere must be preliminarily and permanently enjoined.”
In a statement, CFTC Chair Mike Selig claimed that, by signing the ban into law, Walz “chose to put special interests first and American farmers and innovators last.” Selig emphasized the extent to which farmers, a key constituency in Minnesota, depend on event contracts to hedge against weather and crop-related risks.
But farmers have relied on such CFTC-regulated futures contracts for decades, which have never stirred controversy among state gambling regulators.
It is only in the last 18 months that novel prediction market platforms have introduced bets on sports matches, ongoing military conflicts, the existence of aliens, and the frequency of celebrity social media posts, among other subjects—and it is those wagers that have attracted the ire of state regulators.
