Trump administration sues Minnesota to block prediction markets ban

Nicole Norfleet and Zoë Jackson, The Minnesota Star Tribune on May 19, 2026

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The federal government is suing Minnesota to block a new state law that prohibits Minnesotans from making bets on prediction markets like Kalshi and Polymarket.

Minnesota is the first state in the country to outlaw the popular platforms that allow users to bet on the outcomes of a wide range of real-world events, from who will win the NBA Finals to whether Americans will receive stimulus checks.

Gov. Tim Walz approved the ban Monday after the public safety bill that included the ban received bipartisan support.

The federal Commodity Futures Trading Commission (CFTC) filed the lawsuit, seeking a preliminary injunction to stop the law from going into effect on Aug. 1. Kalshi and Polymarket are federally regulated by the CFTC, which is charged with guarding against market manipulation and insider trading.

“This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” said CFTC chair Michael Selig in a news release.

The CFTC argued that Minnesota’s law undermines its federal regulatory authority and its “exclusive jurisdiction over commodity derivatives.” The commission called Minnesota’s law “the most aggressive move by a state to shut down CFTC-regulated markets,” according to the agency’s release.

Selig said the ban hurts Minnesota farmers who have used derivatives markets to bet on crop yields and weather.

“Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks,” he said. “Governor Walz chose to put special interests first and American farmers and innovators last.”

Minnesota lawmakers have argued prediction markets circumvent state laws that ban other types of betting. The office of Minnesota Attorney General Keith Ellison is reviewing the lawsuit.

“I’m very concerned about the harms of prediction markets on Minnesotans,” Ellison said in a statement. “Prediction markets are designed to be addictive and prey especially on young people and low-income folks. They help the ultra-rich get richer and the rest of us get poorer.”

The CFTC’s lawsuit was expected. The federal agency has already sued several other states for their laws related to prediction markets, including Wisconsin, Illinois, Arizona, Connecticut and New York.