Minnesota bans prediction markets, sued by Trump administration hours later

This week, Minnesota became the first state in the country to ban prediction markets — and hours later, the CFTC and Department of Justice sued the state over the ban, claiming it was illegal.

The sudden turn of events marks the latest escalation in an all-out court war between states and the Trump administration over the fate of prediction markets platforms like Kalshi and Polymarket.

Many states across the country, red and blue Both have sued prediction market platforms for refusing to comply with state-level gambling laws. The states claim that predictive market bets related to sports — or even in some cases politics and entertainment — constitute illegal unlicensed gambling.

Meanwhile, prediction market platforms themselves have argued that they are immune to state-level regulation, and that their bets, like event contracts, fall under the exclusive federal jurisdiction of the Commodity Futures Trading Commission (CFTC). The Trump administration has strongly embraced this view and opposed it numerous Countries This year on this issue.

The dispute is likely to eventually be decided by the US Supreme Court.

On Monday, Minnesota became the first state to completely ban prediction market platforms. Governor Tim Walz signed a invoice To a law that makes it a criminal offense to establish, operate, manage, or advertise prediction market platforms in the state.

Within hours, the CFTC filed an order lawsuitalong with the Department of Justice, argued that Minnesota leaders violated federal law and infringed on the regulatory body’s jurisdiction by imposing the ban.

“If the Minnesota law is allowed to go into effect, so will the exchanges that offer it Long-term contracts – as well as those who share them – can be sued “This blatant and unprecedented incursion into the Commission’s exclusive regulatory domain must be prevented initially and permanently,” the complaint reads.

In a statement, CFTC Chairman Mike Selig claimed that by signing the ban into law, Walz “She chose to put special interests first and American farmers and innovators last. Selig He emphasized the extent to which farmers, a key constituency in Minnesota, rely on event contracts to hedge against weather and crop-related risks.

But farmers have relied on such CFTC-regulated futures for decades, which has never sparked controversy among state gambling regulators.

In just the past 18 months, new prediction market platforms have offered bets on sports matches, ongoing military conflicts, the existence of aliens, and the frequency of celebrity social media posts, among other topics — and it is these bets that have drawn the wrath of state regulators.