CFTC Sues to Block Minnesota Prediction Market Ban, Calls It Felony Risk

The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit to block the Minnesota prediction market ban embedded in 2026 public safety bill SF760, signed by Gov. Tim Walz on May 18. The law escalates continued operation after a cease-and-desist into a felony, with enforcement set to start August 1. On May 19, the CFTC moved for a pre-enforcement injunction. CFTC chair Michael Selig said the Minnesota prediction market ban could make lawful operators and participants “felons overnight,” and argued prediction-market structures can support hedging. He pointed to Minnesota farmers using weather and crop-related risk mitigation for decades. The case is part of a wider U.S. regulatory patchwork. The CFTC previously gained partial traction against Arizona over oversight of “event contracts,” and is now seeking to stop similar state bans—named states include Connecticut, Illinois, and New York. Meanwhile, Massachusetts and Ohio reportedly obtained preliminary injunctions against Kalshi and the CFTC, forcing Kalshi to follow local gambling rules or halt operations. With potentially inconsistent lower-court rulings, the dispute could ultimately reach the U.S. Supreme Court. For crypto traders, this is primarily a regulation-and-compliance headline: it may affect sentiment around crypto-adjacent market venues tied to prediction-market-style derivatives, but it is unlikely to directly move major crypto spot prices. Still, near-term volatility risk can rise around injunction updates and court scheduling tied to the Minnesota prediction market ban.