NEW: Minnesota Governor Signs SF 4760; CFTC Sues to Block It
Key Takeaways:
- Minnesota passed a sweeping ban on prediction markets: SF 4760 makes operating, hosting, and advertising prediction markets a felony.
- The CFTC filed suit against Minnesota on May 19, seeking a preliminary injunction before the August 1 effective date, making this the most aggressive federal intervention in the prediction markets debate to date.
- Prediction markets remain legal in other states: SF 4760 makes Minnesota the first state to legislatively ban them, but it's an extension of the state's broader anti-gambling stance.
Minnesota has become the first state to ban prediction markets through explicit legislation, but the federal government moved to stop it on the same day the ink dried.
Gov. Tim Walz signed SF 4760 on May 18, just days after the legislature forwarded the bill on May 14. On May 19, the Commodity Futures Trading Commission filed a lawsuit against Minnesota to block the law and is seeking a preliminary injunction to prevent it from taking effect on August 1, 2026.
For users in the rest of the country, prediction market platforms like Polymarket remain fully legal and federally regulated, and the lawsuit filed today makes clear that Washington intends to keep it that way.
What SF 4760 Does
SF 4760 creates a new section of Minnesota law titled "Prediction Markets," defining the term as "a system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract." Under the law, Minnesota considers trading on most types of designated contract markets to be gambling, and labels contracts connected to sporting events as sports wagering, which is illegal in the state.
Operating or hosting a prediction market in Minnesota would be a felony, and advertising or marketing one would be as well. The law targets the full prediction market ecosystem, covering operators, payment processors, geolocation services, event data and verification services, and other supporting entities.
All provisions are set to take effect August 1, 2026, assuming the law survives the federal challenge now underway.
How the Bill Came Together
SF 4760 began as a broad public safety package covering retail theft, fraud, impaired driving, and victim rights. Prediction markets were not part of the original bill.
The Senate had separately passed standalone prediction market legislation by a 56-10 vote in late April, but that bill gained little traction in the House. Instead, a House member proposed an amendment adding language on prediction markets to the already-moving SF 4760.
The Senate initially refused to concur with the amended version, sending it to a conference committee, which approved compromise language before both chambers passed the final bill—the Senate 57-9 and the House 100-32.
Notably, Minnesota is not taking steps to protect revenue from legal sports betting. The state is one of 11 where no form of sports betting is currently legal. The prediction market ban is, in effect, an extension of Minnesota's broader resistance to expanded gambling, not a reaction to market competition.
How the Federal Government is Responding
The CFTC's lawsuit, filed the morning after Walz's signature, is the most direct federal intervention in the debate over prediction markets to date.
CFTC Chairman Michael S. Selig said: "This Minnesota law turns lawful operators and participants in prediction markets into felons overnight. Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last."
The CFTC claims that Minnesota's law has a broader reach than any other state the agency has sued to date, including criminalizing weather-related event contracts. This, it says, positions SF 4760 not just as a gambling regulation but as an interference with agricultural hedging markets that Congress placed under federal jurisdiction more than 50 years ago.
The CFTC has previously filed lawsuits against Connecticut, Illinois, and New York, and has filed amicus briefs in multiple federal circuit courts. In a CFTC lawsuit, a federal court in Arizona recently issued a preliminary injunction barring Arizona from using its gambling laws to criminally prosecute prediction market operators.
How Prediction Markets are Responding
Prediction market operators have forcefully pushed back, and their core argument centers on federal jurisdiction. Kalshi has consistently argued that its event contracts fall under federal law rather than state gambling statutes, and Selig has stated that prediction markets and sports betting are "two separate things," emphasizing that event contracts should be treated as financial instruments rather than gambling products.
Kalshi spokeswoman Elisabeth Diana put it bluntly on social media:
Peak hypocrisy: MN banning prediction markets while its gov't collects millions a year from slot machines, poker games, roulette tables, and casino games. Does anyone believe that casinos are safe and well-regulated, but CFTC-registered exchanges and clearinghouses are not? https://t.co/bzfLSpObXp
— Elisabeth Diana (@ediyork) May 13, 2026
What Does This Mean for Users Outside Minnesota?
For now, this only affects Minnesota. Federally regulated prediction market platforms continue to operate legally across the vast majority of the country, and the federal regulatory framework that governs them remains intact.
How courts ultimately rule on Minnesota's law will carry significant weight—for the CFTC, for prediction market operators, and for state legislators watching from the sidelines. But with the CFTC seeking a preliminary injunction before the law even takes effect, the odds of Minnesota's ban surviving long enough to reach August 1 are looking increasingly uncertain.
