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After Minnesota Gov. Tim Walz signed SF 4760 into law last week, the Commodity Futures Trading Commission (CFTC) swiftly sued to prevent it from taking effect.
The state became the first in the nation to outright ban prediction markets like Kalshi and Polymarket, and with Walz’s signature, it’s slated to become law Aug. 1.
The CFTC is seeking a preliminary injunction to halt the new law.
Minnesota law could set national precedent
Much like the US Supreme Court’s decision in Murphy vs. NCAA in 2018 paved the way for legal sports betting across the country, should the CFTC’s lawsuit make it to the Supreme Court, it could have a precedent-setting effect across the country.
In its press release announcing the legal action, the CFTC blasted its perceived overreach by Minnesota:
“Minnesota is one of the largest agricultural producers in the United States. The Minnesota government has nonetheless enacted a state law criminalizing trading in many CFTC-regulated markets with a broader reach than any other state the CFTC has sued to date, including criminalizing weather-related event contracts. The new legislation represents the most aggressive move by a state to shut down CFTC-regulated markets and undermine the federal regulatory regime set up by Congress more than 50 years ago.”
The move marks the most significant action the CFTC has taken since suing Arizona, Connecticut, and Illinois last month.
Minnesota law criminalizes prediction markets
SF4760 makes operating a prediction market in Minnesota a criminal offense, forcing platforms like Kalshi and Polymarket to exit the state or risk felony charges.
The new bill does not stop at the operators themselves, though. It also targets vendors and third-party applications such as VPNs, which can disguise a user’s location in the state.
CFTC Chairman Michael S. Selig defended prediction markets and pushed back against the new law that criminalizes them:
“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.”
