TLDR
- The CFTC and U.S. government sued Minnesota over its new prediction market ban, calling it the most aggressive state crackdown yet
- Minnesota’s SF 4760 makes it a felony to create, operate, or facilitate prediction markets, taking effect Aug. 1, 2026
- The CFTC argues the law threatens traditional derivatives markets including weather and crop contracts used by farmers since the 1990s
- The agency has now filed lawsuits against six states over prediction market restrictions
- Minnesota also passed a separate law banning political candidates from betting on their own elections
Federal Agency Takes Legal Action Against Minnesota’s Prediction Market Law
The Commodity Futures Trading Commission and the U.S. government have filed a lawsuit against Minnesota over the state’s newly signed prediction market ban. The complaint targets SF 4760, which was signed by Gov. Tim Walz on May 18.
The CFTC described the legislation as the first outright ban on prediction markets in the United States. The agency is seeking declaratory and injunctive relief against the state, Walz, Attorney General Keith Ellison, and Minnesota gambling regulators.
CFTC Chairman Michael Selig criticized the law in a public statement. He said Minnesota is putting special interests first and American farmers and innovators last.
Selig warned the law would make it a felony to trade event contracts in the state. He said this would hurt Minnesota farmers who have relied on weather and crop-related event contracts for decades.
The complaint argues the law directly conflicts with the Commodity Exchange Act. The CFTC says that act gives the agency exclusive jurisdiction over swaps and event contracts traded on federally regulated exchanges.
SF 4760 broadly defines prediction markets as systems that allow wagers on future events. It covers markets tied to sports, elections, government actions, weather, public health crises, wars, and popular culture.
Under the bill, creating, operating, or intentionally facilitating a prediction market for consideration and as part of a business is a felony. The provisions are set to take effect on Aug. 1, 2026.
The law also targets the broader ecosystem around prediction markets. That includes payment processors, geolocation providers, data and verification services, and advertisers.
CFTC Warns Traditional Derivatives Markets Could Be Caught in the Crossfire
A central argument in the complaint is that Minnesota’s law could criminalize traditional derivatives markets. These include hedging and risk-management products tied to weather and agriculture.
The CFTC pointed out that federally regulated exchanges like the Chicago Board of Trade and Chicago Mercantile Exchange have offered weather and crop-related derivatives since the early 1990s. Examples include contracts tied to crop yields and temperature volatility.
The agency argues that under Minnesota’s language, these contracts would be classified as wagers. Federally regulated exchanges could face criminal liability for offering them.
The complaint also highlights the law’s potential impact on election contracts and economic-event contracts tied to reports like inflation or unemployment data. Media companies, sports leagues, banks, and data firms could also face liability for interacting with prediction market platforms.
The lawsuit frames the dispute as a federal preemption issue. The CFTC argues Congress created a uniform national framework for derivatives regulation to avoid conflicting state-by-state gambling enforcement.
Minnesota lawmakers also passed a separate measure through HF 4240. That bill specifically prohibits political candidates from placing wagers on elections in which they are running.
Minnesota is now part of an expanding legal battle between states and the CFTC. The agency has filed lawsuits against Arizona, Connecticut, Illinois, Minnesota, New York, and Wisconsin over state attempts to restrict federally regulated event contracts.
The CFTC has also filed amicus briefs in cases involving Massachusetts, Ohio, and Nevada. The agency already secured a legal win in Arizona, where a federal judge issued a preliminary injunction against state officials earlier this month.
