CFTC and DOJ sue Minnesota to block ban on prediction markets, say federal law preempts state

Federal regulators — the Commodity Futures Trading Commission (CFTC), joined by the Department of Justice — filed suit against Minnesota hours after the state approved a law banning prediction markets, arguing the state statute unlawfully interferes with the CFTC’s exclusive authority over derivatives products and federally approved trading platforms ^{[1] [2]}.

Minnesota’s law makes it a crime to create or operate prediction markets and extends liability to related parties including banks, media firms and data providers; the statute targets platforms that allow users to wager on events such as sports outcomes and economic trends ^{[1] [3]}.

The CFTC’s complaint seeks to block the state ban ahead of its effective date, asserting federal preemption for platforms like Polymarket and Kalshi, and legal analysts say the case could redefine the boundary between state and federal regulatory power over prediction markets ^{[2] [4]}.

The litigation will test whether states can impose blanket bans on platforms that federal regulators treat as regulated derivatives; the court’s ruling will shape the legal landscape for prediction markets nationwide ^{[4] [1]}.