U.S. regulatory agency files lawsuit attempting to block Minnesota from implementing first-ever nationwide ban on predictive markets.

The Commodity Futures Trading Commission (CFTC) filed a lawsuit on Tuesday in an attempt to block Minnesota from enforcing a newly enacted law. This law makes Minnesota the first state in the U.S. to completely ban prediction markets such as Kalshi and Polymarket. The federal regulatory agency filed the lawsuit the day after Minnesota Democratic Governor Tim Walz signed the bill. The law went into effect on August 1st, making it a crime to operate, host, or promote prediction markets in the state. These platforms allow users to profit by predicting outcomes of events such as sports games and elections, and have become the center of a battle over whether state gambling regulators have the authority to regulate this multibillion-dollar industry. Kalshi, in particular, has been involved in a series of lawsuits alleging that it operates illegal, unlicensed gambling operations and allows minors under the age of 21 to gamble. In the lawsuit filed on Tuesday, the CFTC argues that Minnesota's new law violates the U.S. Constitution by criminalizing the operation of derivative markets at the state level that are under federal jurisdiction. CFTC Chairman Michael Selig stated in a press release, "This Minnesota law has turned legal operators and participants in prediction markets into felons overnight."