Attorney General Ellison responds to prediction market lawsuits in court

June 18, 2026 (SAINT PAUL) — Attorney General Keith Ellison filed a memorandum today opposing the CFTC’s (Commodity Futures Trading Commission), Kalshi’s, and Polymarket’s attempt to supplant the state’s role in regulating gambling in Minnesota by seeking a preliminary injunction that would prevent Minnesota’s bipartisan Prediction Market Statute from going into effect. 

"Prediction markets are gambling, plain and simple, and Minnesota has every right to keep predatory gambling out of our communities," said Attorney General Ellison. "States regulate gambling so closely because it can be incredibly addictive and immensely harmful without the proper guardrails. Wrapping an old vice in new technology does not change that fact and it does not change our obligation to protect the people of Minnesota.

"Prediction markets also invite people to gamble on not just sports scores, but on the outcomes that shape our democracy," added Ellison. "Minnesotans deserve better than to have our civic life turned into a casino. Furthermore, it is far too easy for those with insider knowledge to wager based on that information or rig the odds by releasing misleading information. Minnesota banned prediction markets because of how predatory, addictive, and harmful they can be. Now, these wealthy and powerful tech companies, and their allies in the Trump administration, are fighting for the right to prey on Minnesotans. I will not allow that to happen on my watch." 

Background

Since early 2025, the popularity of app-based prediction markets has exploded. The two largest prediction market platforms, Kalshi and Polymarket, do billions of dollars of business, offering an ever-increasing range of opportunities to bet yes or no on sporting, political, cultural, entertainment, legal, and catastrophic events. Until then, the federal government had clearly understood that these speculative activities, which are completely untethered from any legitimate financial market, were just another form of gambling that states have always taken the lead in regulating according to each state’s judgment. Since 2025, the federal government’s position has changed. 

In 1974, Congress revised the Commodity Exchange Act and created the CFTC to strengthen regulation of commodity futures. Commodity futures are financial contracts to purchase a particular good at a set price in the future, which helps both producers like farmers and consumers of their goods manage the risk of unpredictable price fluctuations. Since 2010, the CFTC has also regulated “swaps,” which Congress defined as a contract that “is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.”

Companies like Kalshi and Polymarket offer, for a fee, so-called event contracts in which two bettors wager against each other as to whether a particular event with no connection to any legitimate financial market will or will not occur. Millions of people bet each month.

Minnesota recognized a new version of an old problem: gambling. While gambling can be simple entertainment for some, it is dangerous, addictive behavior for others and is carefully regulated for that reason. Additionally, many of the events being wagered on in prediction markets are particularly vulnerable to manipulation by those with insider knowledge of that particular event. For example, according to media reports, former Congressman George Santos announced that he would attend the 2026 State of the Union. He then bet tens of thousands of dollars against his own attendance on a prediction market and ultimately skipped the event, blaming a missed flight. Further, many of the events being wagered on in prediction markets are also sensitive matters particularly in need of protection, such as our elections, the deaths of public figures, the odds of military conflicts or natural disasters.

Given these concerns, Minnesota passed a law making it a felony to offer or facilitate certain forms of event contracts – those involving sports, political, cultural, entertainment, legal, and catastrophic events – while leaving untouched commodity futures and other contracts used to manage financial, economic, or commercial risk. The CFTC, Kalshi, and Polymarket sued, insisting that only the CFTC can regulate this form of gambling in Minnesota. Each brought a motion for preliminary injunction, seeking to temporarily prevent the statute from taking effect on August 1, while the full scope of the lawsuit plays out.

Minnesota’s Prediction Market Statute should be allowed to take effect as the legislature intended. Allowing the legislation to take effect does not require the CFTC to do anything. And Kalshi and Polymarket can avoid running afoul of the law by blocking the availability of their product within Minnesota based on location data. The upside for Minnesotans is clear.

The Brief

In the memorandum in opposition to the CFTC’s, Kalshi’s and Polymarket’s motions for preliminary injunction, Attorney General Ellison argues that the CFTC’s regulation of commodity futures and swaps does not preclude Minnesota from regulating gambling – this time in the form of sports, cultural, political, and social event contracts. Gambling falls squarely within Minnesota’s lawful exercise of its authority to regulate matters impacting public safety and prevent a surge of predatory, addictive gambling.

The CFTC’s Authority

The Commodity Exchange Act (CEA) grants the CFTC “exclusive jurisdiction” over just two types of transactions: (1) commodity futures, and, since 2010, (2) swaps. 7 U.S.C. § 2(a)(1)(A). No party believes that prediction market wagers are commodity futures, as those wagers are not contracts to purchase goods at a particular price in the future. 

The Commodity Exchange Act defines “swap” as an agreement, contract, or transaction, that “is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” 7 U.S.C. § 1a(47)(A)(ii). Prediction market wagers are not connected to the type of financial impact Congress intended the CFTC to regulate under the CEA. Outcome focused wagers like how many points the Minnesota Lynx score in a given game, or whether a television pundit uses a buzzword on the air, do nothing to stabilize prices for producers and consumers, serve no legitimate economic purpose, and are not associated with a potential financial, economic, or commercial consequence. Accordingly, the CEA does not grant the CFTC “exclusive jurisdiction” over the regulation of event contract gambling or, in turn, preclude Minnesota from regulating such gambling. 

Minnesota’s Authority

The CFTC’s, Kalshi’s, and Polymarket’s arguments to the contrary ignore several long-standing legal and common-sense points. First, protection of public health and safety is among the core powers of the states to police or regulate. Second, under the most basic norms of federalism, courts begin with the assumption that the United States Congress does not intrude on the historic police powers of the states without saying so clearly. The CFTC’s, Kalshi’s, and Polymarket’s argument that the CEA’s definition of a swap places all event contracts – including sports betting – in the CFTC’s basket requires believing that Congress dramatically upended the regulation of gambling, including sports betting, but cared so little about this significant change to an established, profitable area of business that they merely hinted at the change in an opaque definition and waited over a decade for anyone to take notice. Congress knows how to make a clear statement, and it is absurd to believe they simply did not in this case.

In fact, the CFTC and Minnesota can both regulate Kalshi and Polymarket without trouble. Kalshi and Polymarket can easily satisfy federal requirements set forth under the Commodities Exchange Act but, at least in Minnesota, restrict their offerings to subjects that do not include sports betting, pop culture event betting, or other wagers prohibited under the Minnesota Prediction Market Statute. They simply do not want to, because facilitating gambling is wildly profitable.

Kalshi and Polymarket have created a circumstance where they win every time and Minnesotans lose. Minnesota joins many other states, including Arizona, Connecticut, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Montana, New Mexico, Nevada, New Jersey, New York, Ohio, Rhode Island, Tennessee, Utah, Washington, and Wisconsin, in fighting to ensure that states – not profit maximizing companies and a federal agency carrying their water - get to decide how to protect and ensure the health, safety, and well-being of their citizens. For the good of Minnesotans, the Minnesota Prediction Market Statute should be upheld.

The court has scheduled a July 2 hearing on the CFTC’s, Kalshi’s, and Polymarket’s motions for a preliminary injunction.