The Commodity Futures Trading Commission (CFTC) is asking a federal judge to block a new Minnesota law that would make operating or helping run certain prediction markets a felony, opening another front in the growing fight between states and federal regulators over event-contract trading.
The lawsuit, filed Tuesday (May 19) in federal court, argues that Congress gave the CFTC sole authority over derivatives markets decades ago and that Minnesota cannot override that system through state criminal law. The agency wants the court to stop the measure before it takes effect August 1.
“Plaintiffs bring this action to halt Defendants’ efforts to criminalize the operation of derivatives markets governed by federal law,” the complaint states.
NEW: Minnesota Gov. Walz approved SF4760 on May 18, making MN the 1st state to ban prediction markets tied to sports, elections & more. @RWW #PredictionMarkets pic.twitter.com/D0YPeRURBz
— Suswati Basu (@suswatibasu) May 19, 2026The case names Minnesota, Gov. Tim Walz, Attorney General Keith Ellison, the Department of Public Safety, and Alcohol and Gambling Enforcement Division Director Jon Anglin as defendants.
CFTC lawsuit against Minnesota comes as federal regulators battle states over event contracts
Minnesota lawmakers added the prediction market language to the state’s public safety bill earlier this year. The statute defines a prediction market as a system allowing consumers “to place a wager on the future outcome of a specified event,” including elections, weather, sporting events, and government actions.
Federal regulators say the law reaches far beyond traditional gambling restrictions. According to the complaint, it would criminalize not only exchanges offering event contracts, but also payment processors, service providers, and others connected to those markets. The statute bans anyone from “intentionally facilitat[ing] the operation of a prediction market,” including businesses handling payments or “provid[ing] supportive services to a prediction market.”
The CFTC and the Justice Department also filed a request for a preliminary injunction seeking to pause enforcement while the litigation moves forward. “This Court should grant Plaintiffs’ motion and enter the proposed order, which would enjoin Defendants from enforcing Article 8 of SF 4760,” the filing states.
The lawsuit follows similar federal action against Wisconsin and reflects a wider campaign by regulators to push back against state gambling enforcement efforts targeting prediction market operators. Federal officials have argued in several recent cases that event contracts traded on federally regulated exchanges fall under the Commodity Exchange Act rather than state gaming laws.
“These markets are CFTC-registered exchanges, and the contracts they offer — derivative instruments called ‘event contracts’ — have traded under the Commission’s oversight for decades,” the complaint states. “If Minnesota’s law is permitted to go into effect, the exchanges that offer these longstanding contracts — as well as those who partner with them — can be prosecuted as felons.”
Governor Walz and Minnesota are putting special interests first and American farmers and innovators last.Minnesota’s new law would make it a felony to trade event contracts in the state, hurting Minnesota farmers who have relied on weather and crop-related event contracts for…
— Mike Selig (@ChairmanSelig) May 19, 2026The agency also warned that the Minnesota law could affect weather and agricultural hedging products used by farmers.
“This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” CFTC Chairman Michael S. Selig said in a statement released alongside the lawsuit. “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.”
Featured image: Gage Skidmore / CC BY-SA 2.0 / CFTC
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