The U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit on Tuesday seeking to block Minnesota from enacting a newly enacted law. The law makes the state the first in the nation to outright ban prediction markets such as Kalshi and Polymarket. The federal regulator filed the lawsuit the day after Minnesota Democratic Gov. Tim Walz signed the bill. The bill, which takes effect on August 1, makes it a crime to operate, host or promote prediction markets in the state.
Such platforms, which allow users to profit from predictions about events such as sports and elections, have become central to a fight over whether state gambling regulators have the authority to regulate the multibillion-dollar prediction market industry.
Kalshi, which was valued at $22 billion in its most recent funding round, is particularly embroiled in a series of lawsuits involving multiple state governments alleging that it operated an illegal, unlicensed gaming operation that allowed adults under 21 to gamble.
In a lawsuit filed on Tuesday, the CFTC argued that Minnesota's new law violates the U.S. Constitution because it criminalizes operations in derivatives markets governed by federal law at the state level.
"This Minnesota law turns legitimate operators and participants in prediction markets into felons overnight," CFTC Chairman Michael Selig said in a statement.
