Minnesota Bans Prediction Markets—And Is Sued By the Trump Admin Hours Later

In brief

• Minnesota became the first state to ban prediction markets, making it a felony to operate or advertise such platforms.
• Hours later, the CFTC and DOJ sued the state, arguing the ban illegally interferes with federal authority.
• The clash is the latest escalation in a broader fight between states and the Trump administration over prediction market regulation.

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

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

Numerous states across the country, red and blue alike, have sued prediction market platforms for refusing to comply with state-level gambling laws. The states claim prediction market wagers related to sports—or even in some cases to politics and entertainment—constitute illegally unlicensed gambling.

The prediction market platforms themselves, meanwhile, have argued they are immune from state-level regulation—and that their wagers, as event contracts, fall under the exclusive, federal jurisdiction of the CFTC. The Trump administration has aggressively embraced this view, countersuing several states this year over the issue.

The conflict is likely to ultimately be decided by the U.S. Supreme Court.

On Monday, Minnesota became the first state to outright ban prediction market platforms. Gov. Tim Walz signed a bill into law making it a felony crime to create, operate, manage, or advertise  prediction market platforms in the state.

Within hours, the CFTC filed a lawsuit, alongside the Department of Justice, claiming Minnesota’s leaders violated federal law and encroached on the regulator’s jurisdiction by instituting the ban.