The CFTC filed suit against Minnesota in federal district court on May 19, 2026, marking the agency’s sixth lawsuit in seven weeks against a state seeking to regulate or prohibit CFTC-registered prediction markets. Filed one day after Minnesota’s governor signed a first-in-the-nation ban into law, the complaint argues that the state’s criminalization of prediction market operators is preempted by the Commodity Exchange Act and violates the U.S. Constitution.
The Minnesota Law
The Minnesota law, set to take effect August 1, would make it a crime to operate, host, or promote a prediction market within the state. The CFTC contends that the law impermissibly encroaches on federally regulated derivatives markets. The agency’s theory, consistent across all six suits, is that event contracts qualify as “swaps” under the CEA, placing them within the CFTC’s exclusive jurisdiction and preempting state gambling regimes as applied to federally registered designated contract markets (DCMs).
Six Suits in Seven Weeks
The Minnesota action is the latest in a rapid enforcement sequence:
- April 2: The CFTC and DOJ filed suit against Arizona, Connecticut, and Illinois after each state took action against registered contract markets.
- April 24: The CFTC sued New York after the state attorney general filed gambling-law actions against two registered exchanges.
- Late April: The CFTC sued Wisconsin after the state’s attorney general sued five prediction market operators. The CFTC responded within days with a federal suit (joined by the DOJ Civil Division) to assert federal primacy.
- May 12: The CFTC filed an amicus brief in the Sixth Circuit in a separate appeal.
- May 19: The CFTC filed suit against Minnesota.
States Push Back on Bipartisan Ground
The states are not yielding. More than 20 lawsuits and cease-and-desist actions against prediction market platforms are pending nationwide. A 38-state coalition has filed briefs in pending actions supporting state gambling oversight, and a bipartisan group of 41 state attorneys general has submitted comments to the CFTC Commission arguing that prediction market contracts are indistinguishable from sports betting and within states’ traditional police powers.
Courts Split; Supreme Court Review Likely
The judicial picture is mixed. The Third Circuit ruled 2-1 that states cannot enforce gambling laws against prediction markets offering election and event-based contracts, and the CFTC secured a preliminary injunction in Arizona blocking the state from pursuing criminal charges against the largest domestic operator. Courts in Nevada, Maryland, and Ohio, however, have ruled in favor of the states. With cases still pending in the remaining jurisdictions and no initial rulings in several, a circuit split is solidifying, setting up an ideal statutory preemption vehicle for Supreme Court review.
Putting It Into Practice: Registered DCMs offering event contracts should map state-by-state exposure now, with particular focus on the six states under federal countersuit and the more than 20 pending civil actions and cease-and-desist proceedings nationwide. Operators should consider state-specific product gating for sports-related contracts pending Supreme Court resolution, refresh age-verification and consumer-protection controls to counter the attorneys general’s “indistinguishable from sports betting” framing, and update litigation-hold protocols to account for parallel federal and state proceedings. If certiorari is granted, as appears increasingly unavoidable, there is ample reason to expect the CFTC’s interpretation of the CEA framework ultimately will prevail given the Court’s strict textualist approach to federal preemption questions. Until then, however, the CFTC’s posture does not insulate platforms from aggressive state-level enforcement, creating a dual-compliance challenge in the interim.