Published on: May 20, 2026, at 10:15 AM.
Updated on: May 20, 2026, at 10:15 AM.
- Minnesota has officially banned prediction markets.
- The CFTC has moved quickly to file a lawsuit against the state.
- Officials claim Governor Walz prioritizes special interests over farmers.
On this past Monday, Governor Tim Walz (D-MN) enacted legislation prohibiting prediction markets, marking Minnesota as the inaugural state to implement such a ban. This action has prompted immediate backlash from the Commodity Futures Trading Commission (CFTC).
The provisions in SF 4760, a comprehensive public safety legislation, classify the operation or assistance in running a prediction market as a felony in Minnesota. The CFTC, which governs prediction markets on a federal level, argues that this ban is detrimental to Minnesota’s agricultural sector, which has historically benefited from the contracts governed by the CFTC.
This new Minnesota legislation criminalizes lawful operators and participants in prediction markets almost instantaneously,” stated CFTC Chairman Michael Selig. “Farmers in Minnesota have depended on essential derivatives during weather and crop-related occurrences for many years to manage their risks. Governor Walz has seemingly prioritized special interests over the welfare of American farmers and innovators.”
Farm producers have traditionally utilized commodities futures contracts, which are derivatives regulated by the CFTC, for mitigating risk and managing their financial exposure.
Comparison to Arizona’s Situation from CFTC’s Perspective
Though Minnesota is the first state to implement a ban on prediction markets, it is not the only state that has ventured into legal concerns surrounding binary betting exchanges.
In March, Arizona Attorney General Kris Mayes (D) initiated a comprehensive 20-count criminal case against Kalshi, the largest operator of prediction markets in the U.S., claiming that the company violated state regulations by offering contracts linked to sports events and election outcomes.
The CFTC responded promptly with a lawsuit against Arizona, leading a federal judge to grant Kalshi a preliminary injunction that prevents Arizona from seeking criminal prosecution against the company.
According to the CFTC, “In a lawsuit filed by the CFTC, a federal court in Arizona recently issued a preliminary injunction halting Arizona from applying its gambling laws to pursue criminal charges against prediction market operators.” The Commission has also initiated legal action against Connecticut, Illinois, and New York while submitting amicus briefs to both the Sixth and Ninth Circuit Courts of Appeals and the Supreme Judicial Court of Massachusetts.
Political Repercussions and Scrutiny
With Walz as the Democratic nominee for vice president in 2024, the ban on prediction markets in Minnesota may attract intense political scrutiny, especially as the state grapples with allegations of extensive fraud. Recently, the Minnesota Star Tribune reported that it is “well known” that state officials ignored signs of fraudulent activities. The CEO and publisher of the newspaper, Steve Grove, previously served as the Commissioner of the Minnesota Department of Employment and Economic Development (DEED) under Governor Walz.
While the prediction market industry is often perceived as favoring right-leaning interests, partially due to the affiliations of Donald Trump Jr. with both Kalshi and Polymarket, lobbyists for Kalshi have established strong connections with Democratic officials. The newly formed Coalition for Prediction Markets (CPM), despite its bipartisan stance, is led by Sean Patrick Maloney, a Democrat who represented New York in Congress for a decade.
The CFTC’s challenge against Minnesota is now in the hands of U.S. District Judge Laura Provinzino, who was appointed by former President Joe Biden.