CFTC Sues Minnesota Over Its New Prediction Market Ban

The Commodity Futures Trading Commission has added another state to its legal fight over prediction markets.

The federal regulator has filed a lawsuit against the state of Minnesota over its new bans on prediction markets. The ban would make it a criminal offense for operators to offer or advertise sports or political markets. The controversial new legislation was signed into law this week, with the CFTC filing its lawsuit just hours later.

Minnesota is the sixth state to face a lawsuit from the regulator.

CFTC Head Rips Minnesota Over Ban

As is typical for the current White House administration, CFTC Chairman Michael Selig used strong rhetoric when announcing the new lawsuit. However, Minnesota’s decision to criminalize certain prediction markets carries severe risks for prediction market operators.

Selig didn't mince words when announcing the lawsuit in a press release.

This Minnesota law turns lawful operators and participants in prediction markets into felons overnight. 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.

Minnesota Didn’t Shy Away From the Fight

Unlike the first few states to be sued by the CFTC, Minnesota knew exactly what it was getting into. 

Last month, the CFTC filed several lawsuits against states, including Arizona. The Copper State had also added criminal penalties for prediction markets, though an early court ruling has prevented it from enforcing them. Now, the state will face an expensive and lengthy legal fight that upcoming rulings from other cases across the US may ultimately decide. 

Despite the situation Arizona was facing, Minnesota still decided to follow its lead. They passed the bill knowing it would likely lead to a legal fight with the CFTC, and by extension, the White House. 

Minnesota Sports Betting Effort Still Alive

Unlike the other states facing lawsuits from the CFTC, Minnesota has not legalized retail or mobile betting. However, several lawmakers believe that this should change in 2026.

The Senate is currently considering SF 4139, which would legalize mobile sports betting. While it overcame an attempt to return it to committee two months ago, it has not moved since then.

Minnesota lawmakers remain wary of the impact of sports betting on residents, but that has begun to shift. The presence of sports prediction markets is leading to a spike in problem gambling, but without contributing the critical tax revenue needed to help support struggling bettors.

Bill sponsor Nick Frentz told ABC 5 in Minnesota that prediction markets are a big reason why his bill needs to pass in 2026.

The federal government essentially said ‘prediction markets’ are legal statewide, nationwide, and that includes sports betting. 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.