Walz signs ban; Trump admin sues to block it

Minnesota prediction – Minnesota’s new ban on prediction markets like Kalshi and Polymarket has triggered a direct clash with the Trump administration. After Gov. Tim Walz signed the ban on Monday, the U.S. Commodity Futures Trading Commission sued Tuesday to stop it from taking eff

For the third day in a row, Minnesota’s top political staff has been staring at the same clock: Aug. 1.

On Monday, Gov. Tim Walz signed a total ban on futures trading platforms like Kalshi and Polymarket. Then, on Tuesday, the Trump administration filed a lawsuit to block the ban from taking effect on Aug. 1. The legal fight is not just about one state’s rules—it’s about who gets to decide what counts as gambling. what counts as a financial market. and how far federal regulators can go when states move first.

This week’s emergency filing comes as the CFTC escalates an effort already underway. In 2026, the Commodity Futures Trading Commission sued Illinois, New York, Arizona, Connecticut and, most recently, Minnesota for efforts to restrict or ban prediction markets.

Minnesota’s ban is aimed at a type of platform that many states now see as a loophole—bets sold under the label of “prediction markets. ” even when the wagers track sports. wars and political outcomes. Minnesota State Rep. Emma Greenman. who introduced the legislation. said a “bipartisan law stops companies like Kalshi and Polymarket from offering bets in Minnesota on the outcome of events like sports. wars and political outcomes under the guise of ‘prediction markets.’” She added that Minnesota has had the authority to regulate gaming and gambling “since we were a territory.”.

Minnesota’s attorney general, Keith Ellison, also framed the issue as consumer harm and political arithmetic. In a statement to Salon. Ellison said. “Prediction markets are designed to be addictive and prey especially on young people and low-income folks.” He continued: “They help the ultra-rich get richer and the rest of us get poorer.” Ellison said. “My office and I are reviewing this lawsuit and will respond in court.”.

But the CFTC’s position cuts straight through the state’s argument about its own power. The agency says its authority supersedes the state’s ability to regulate futures trading.

The political tension is already embedded in the market itself. Donald Trump Jr. serves as a strategic advisor for Kalshi, and he has invested in Polymarket through his venture capital firm.

The scale of money at stake is part of why states are moving quickly. In early 2025, monthly trading averaged around $1.2 billion. Less than two years later, the current monthly trades amount to over $20 billion.

Minnesota isn’t alone. At least 15 states introduced legislation in 2026 attempting to regulate prediction markets. Many of the proposals attempt to use authority over gambling and sports betting to regulate events contracts platforms—business models that opponents argue dip into both categories.

Yadav, a law professor at Vanderbilt University Law School, described why the debate has become so tangled. Prediction markets. she said. were once closer to opinion polling than gambling: “Opinion polls are people kind of giving their off the cuff thoughts. but this is about people putting a little bit of money on the line. ” Yadav told Salon. “You’re putting money on the outcome of potential events happening or you’re betting on certain probabilities with respect to future events.” She added that futures trading used to be niche. used for experiments in universities and by specific industry actors. before platforms like Kalshi and Polymarket brought the market to “the masses.”.

State regulators, Yadav said, are pushing back hard against the CFTC’s jurisdiction. She described the conflict as a boundary fight: regulators see sports betting as their domain, and the controversy centers on “state regulators are really pushing back hard against the CFTC’s jurisdiction.”

Greenman put that framing even more directly. She said: “It has only been in the last year that the CFTC has changed its position. usurping established state authority and exceeding its authority to green light this perversion of commodity futures markets to be used by gambling platforms to evade the rightful gambling regulatory structures. which we and other state governments have created through careful and time-honored policymaking.”.

The companies at the center of the battle dispute Minnesota’s view of what it’s regulating. A Polymarket spokesperson said in a statement to Salon. “Minnesota’s ban runs counter to the federal government’s established framework for regulating prediction markets as evidenced by the lawsuit from the CFTC against Minnesota to defend their exclusive jurisdiction over these markets.”.

Polymarket and Kalshi have also argued they are not the same kind of business as traditional gambling or sports betting operators. The platforms say there is no house or sportsbook to bet against; instead, prediction markets are driven purely by participants.

To the CFTC, though, those distinctions don’t control the legal outcome. CFTC Chairman Michael S. Selig said in a statement, “This Minnesota law turns lawful operators and participants in prediction markets into felons overnight.”

Kalshi’s response was equally blunt, and it landed on federalism. Kalshi representative Elizabeth Diana said. “Minnesota banning prediction markets is like trying to ban the New York Stock Exchange.” She added that states can’t ban federally regulated exchanges “because doing so is a blatant violation of the constitution and federal law (and a giant waste of taxpayer resources and everyone’s time).” Diana also said a ban in the state might drive activity offshore and completely out of the CFTC’s authority.

The fight over jurisdiction is unfolding while other concerns about the integrity of these markets keep surfacing. Figures within the Trump administration have drawn scrutiny for suspiciously timed bets on major events. including in the ongoing Iran war. In February, Gannon Ken Van Dyke, a U.S. Army soldier, placed a $400k bet on the expulsion of former Venezuelan President Nicolás Maduro using inside information. He is now being charged with using classified info to make a profit.

Beyond government inside trading, the article also points to other insider-linked activity. A video editor for MrBeast—described as the most subscribed to creator on YouTube—was recently suspended by Kalshi for “near-perfect trading success on markets with low odds” related to MrBeast videos.

Polymarket’s structure is a further point of contention. While Kalshi has ramped up internal investigations in the last few months. the piece says many of the riskiest trades seem to happen on Polymarket. which uses blockchain technology and cryptocurrency to run its bets. making finances and identity hard. if not impossible. to trace. It also notes that Polymarket was banned for U.S. users in 2022 under the Biden administration. The platform now has a U.S. version regulated by the CFTC, but the international original version remains where most betting takes place, with many U.S. users using virtual private networks to mask their location.

Greenman argues that enforcement capacity is part of the reason states should retain control. She said. “The truth is that the CFTC does not have the experience. expertise. personnel. technology or budget to police gambling in all 50 states. or to protect consumers and minors from the dangers of gambling.” She added. “We should not allow these shadowy prediction gambling companies to evade the established and experienced state gambling regulation and enforcement structures.”.

The Trump administration’s lawsuit. and the CFTC’s stance across multiple states. sets up a test that will likely reverberate well beyond Minnesota. One side says the market is a federally regulated futures exchange framework. The other says it behaves like gambling—especially when bets target sports. wars and elections—and that states have a long-established right to regulate it.

With Aug. 1 approaching, the argument is no longer theoretical. It is now a question of whose rules take effect—and what happens to Minnesotans in the time between a signed ban and a court deadline.

Minnesota prediction markets Tim Walz Kalshi Polymarket CFTC lawsuit futures trading platforms Donald Trump Jr. Keith Ellison Emma Greenman Michael Selig events contracts Aug. 1 ban