Minnesota Becomes First US State to Criminalize Prediction Markets; CFTC Sues to Block the Law

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.

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