CFTC Sues Minnesota to Block State Law Banning Prediction Markets; Trump Admin Aims to Deregulate Prediction Markets
NEWS & RESEARCH
Minnesota enacted a law subjecting operators of markets that allow users to place bets on future events to five years in prison and a $10,000 fine. Fourteen other states are considering similar laws. But on May 19, 2025, the federal Commodity Futures Trading Commission sued Minnesota to block the law from taking effect this summer. The Trump administration is moving to shield prediction markets like Polymarket and Kalshi from state-level "illegal gambling" crackdowns around the country. At the same time, the administration has dropped Biden-era investigations into Polymarket. Ethical concerns are mounting as Donald Trump Jr. serves as an adviser to both major platforms, and Trump Media and Technology Group prepares to launch its own competitor, Truth Predict.
SOURCES: New York Times | PBS News | NPR | CNN | CNBC | Campaign Legal Center
ANALYSIS & OPINION
Critics via NPR view the CFTC’s lawsuits as an unprecedented federal attempt to override state laws.
he Project on Government Oversight warns that Trump Jr.’s access to nonpublic information creates significant risks for insider trading.
While the administration favors a "light touch," The Atlantic and WIRED report growing bipartisan opposition, with some conservatives and advocates arguing the platforms essentially allow wagering on "human suffering."
SOURCES: NPR | POGO | The Atlantic | WIRED
HOW TO FIX IT
Congressional action:
Restrict Wagers: Pass the BETS OFF Act to ban betting on sensitive events like war, assassinations, or government actions.
Ban Official Participation: Enact the End Prediction Market Corruption Act to prohibit the President, Congress, and their families from trading.
Restore State Power: Pass the Prediction Markets Security and Integrity Act to return regulatory authority to the states and establish federal consumer protections.
Strengthen Ethics: Amend the STOCK Act to include prediction markets and task the Office of Government Ethics with developing specific oversight guidance.
Legislation: S.4115 - BETS OFF Act | S.4017 - End Prediction Market Corruption Act | S.4060 - Prediction Markets Security and Integrity Act
