Minnesota Becomes First US State to Criminalize Prediction Markets; CFTC Sues to Block the Law
Governor Tim Walz signed SF 4760 on May 19, 2026, making it a felony for prediction market operators to serve Minnesota residents starting August 1. The CFTC filed suit in federal district court the next day, arguing the law is preempted by the Commodity Exchange Act.
On May 19, 2026, Minnesota Governor Tim Walz signed SF 4760, an omnibus public-safety bill that absorbed the standalone prediction-market ban originally introduced as SF 4511. The statute makes it a felony to operate an event-contract platform inside Minnesota starting August 1, 2026, and reaches markets on athletic events, elections, weather, war, terrorism, public health crises, court cases, deaths, assassinations, entertainment, statements by named individuals, and dice or card games. Agricultural weather hedging and traditional securities and commodities are explicitly carved out. Operating a VPN or other service that facilitates Minnesota residents accessing a banned platform is separately prohibited. Minnesota is the first US state to enact a felony-level criminal ban on prediction markets, and the breadth of the statute (operators, facilitators, and the markets themselves) goes well beyond the civil challenges previously brought by other state attorneys general.
On May 20, less than 24 hours after the signing, the Commodity Futures Trading Commission filed suit in the US District Court for the District of Minnesota, seeking a preliminary injunction to block the law before its August 1 effective date. The complaint argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over derivatives listed on a Designated Contract Market, and that state gaming laws cannot criminalize conduct on a federally licensed exchange any more than they could ban S&P 500 futures. CFTC Chairman Michael Selig was unusually direct in the agency's statement: "This Minnesota law turns lawful operators and participants in prediction markets into felons overnight." The framing matters because Selig is asking the court not just to enjoin the statute but to treat the question as a clean federal-supremacy issue rather than a closer call on traditional state gambling powers.
Kalshi's response, posted on X within an hour of Walz's signature, compared the ban to "trying to ban the New York Stock Exchange." Polymarket has not issued a public statement. Both platforms remain accessible in Minnesota today, along with Robinhood (which routes orders through Kalshi and its own MIAXdx DCM, both covered by the ban), Manifold, and PredictIt. None of the operators has publicly committed to a post-August-1 plan, which is itself a signal: a clear "we will continue serving Minnesota residents" statement would be a useful talking point in the federal litigation, and its absence suggests legal counsel is keeping options open while the court considers the preliminary injunction motion.
The Minnesota fight is the cleanest preemption test the industry has faced. Kalshi won a federal court ruling against the CFTC itself in 2025 over the agency's attempt to block sports contracts; this time the agency is on Kalshi's side of the same argument, applied to a state instead of a federal counterparty. Minnesota Attorney General Keith Ellison will argue that SF 4760 is a gambling statute, not a securities statute, and that the state's traditional police power over wagering survives the CFTC's licensing authority. If the District of Minnesota rules for the CFTC, the case heads to the Eighth Circuit and likely the Supreme Court, but every other state legislature with a pending bill (Massachusetts and New Jersey both have similar measures in committee) gets a signal to wait. If Minnesota wins even at the preliminary-injunction stage, expect a wave of copycat bans before the November midterm cycle. For Minnesota residents holding open positions, the practical question is whether to wind down before August 1 or trust the federal court to step in; we cover that decision in detail on our Minnesota state page.
Operators mentioned in this article
CFTC-regulated Kalshi
First fully CFTC-regulated US event-contract exchange.
Crypto / On-chain Polymarket
USDC-settled on Polygon. Largest prediction market by volume.
Broker (Embedded Contracts) Robinhood
Consumer brokerage offering embedded event contracts. Fastest-growing retail prediction market platform in the US.
Recent updates
Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanor, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing of suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinizing oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures attempting to trade 'oftentimes after the fact.' The remarks highlight the CFTC's dual and somewhat conflicting role as both the platforms' federal protector and their manipulation watchdog, at a time when the agency has shed enforcement staff.