CFTC Sues Minnesota Over Prediction Market Ban

The Commodity Futures Trading Commission and the U.S. government filed a federal lawsuit against Minnesota and state officials over SF 4760. The complaint, lodged in U.S. District Court, names Governor Tim Walz, Attorney General Keith Ellison and state gambling regulators and seeks declaratory and injunctive relief to block enforcement of the law.

Governor Walz signed SF 4760 on May 18. The law adds a new ‘Prediction Markets’ section and defines prediction markets as systems that allow wagers on future events, including sports, elections, government actions, weather, public health issues, wars, assassinations and popular culture. Creating, operating or intentionally facilitating a prediction market ‘for consideration and as part of a business’ is made a felony. The statute reaches service providers that work with such platforms, including payment processors, geolocation providers, data and verification firms and advertisers. The provisions take effect Aug. 1, 2026.

The CFTC’s complaint says the Commodity Exchange Act gives the agency exclusive jurisdiction over swaps and event contracts traded on federally regulated exchanges and that Minnesota’s law conflicts with that federal framework. The filing warns the state statute could criminalize derivatives offered on exchanges such as the Chicago Board of Trade and the Chicago Mercantile Exchange, including weather and crop-related contracts used for hedging since the early 1990s.

The lawsuit argues the law could reach beyond exchanges and expose media companies, sports leagues, banks, payment providers and data firms to possible criminal liability for interacting with prediction market platforms. The complaint cites potential effects on markets tied to elections, government actions and economic indicators such as inflation and employment reports.

On the social platform X, CFTC Chairman Michael Selig wrote that the law would make it a felony to trade event contracts in the state and that it would harm farmers who have relied on weather and crop-related event contracts for decades. The agency filed the suit to protect what it describes as federal market oversight.

Separately, Minnesota enacted HF 4240 this session, which makes it a petty misdemeanor for a political candidate to place a wager on an election in which they are running. SF 4760 also amends state gambling statutes to specify that commodity and securities contracts are exempt from gambling law ‘except as provided in section 609.7615,’ the new prediction markets prohibition.

The CFTC has brought similar cases against Arizona, Connecticut, Illinois, New York and Wisconsin and has filed amicus briefs in other matters. A federal judge recently issued a preliminary injunction in Arizona against state officials; the Minnesota case will add to the series of legal challenges testing the agency’s preemption claims.