The Commodity Futures Trading Commission is taking Minnesota to court to block a new state law that would make online prediction markets a felony. Set to take effect August 1, SF 4511 imposes up to five years in prison and $10,000 fines for creating, operating, or promoting these markets.
The law broadly defines banned event contracts to include elections, sports, public health, and economic indicators. Minnesota lawmakers label them illegal bets, but the CFTC disagrees, asserting prediction markets are federally regulated derivatives under its exclusive authority.
This case challenges the entire prediction market sector. Platforms like Kalshi and Polymarket rely on regulatory certainty. A ruling favoring Minnesota could destabilize the industry; a win for the CFTC would solidify federal control over these financial instruments.