CFTC Files Lawsuit Over Minnesota’s Prediction Market Ban

Any thoughts that the White House might change its stance on prediction markets came crashing down this week.

The Commodity Futures Trading Commission has filed a lawsuit against the state of Minnesota over its new bans on certain prediction markets. The new ban focuses on markets involving sports and politics, and imposes severe consequences for operators who violate it. The federal regulator is seeking a court order to keep all prediction markets active in the state while the fight over the ban plays out. 

“This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” CFTC Chairman Michael Selig shared in a press release. “Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first, and American farmers and innovators last.”

The new ban would allow criminal charges to be filed against operators who advertise in the state. This could include in-game advertising during sporting events. That’s a big problem for operators like Kalshi, whose logos have been all over the NHL’s 2026 Stanley Cup Playoffs.

Minnesota is the sixth state to be sued by the CFTC, joining Arizona, Connecticut, Illinois, New York, and Wisconsin. The state is currently one of the few states without a retail or mobile sports betting market.

Push to Legalize Sports Betting Gains Momentum

Like several other states, Minnesota lawmakers have been shifting their stance on legal sports betting. 

The presence of sports prediction market apps is allowing residents to legally wager on sports, without the tax revenue that a legal Minnesota sports betting market would generate. As a result, problem gambling is already spiking, but the state doesn’t have the funds to help support those who are struggling.

“The federal government essentially said ‘prediction markets’ are legal statewide, nationwide, and that includes sports betting,” sports betting proponent Sen. Nick Frentz told ABC 5 in Minnesota. “We’ve seen a significant increase in illegal and some would say legal sports betting in Minnesota, including on mobile platforms like on your phone.”

The state Senate is currently considering SF 4139, which recently survived a vote to return it to the Committee on State and Local Government. The bill would create a mobile market in which 11 tribes could obtain licenses.