Polymarket sues Minnesota Governor, AG following state’s ban on prediction markets

Polymarket has filed a lawsuit in Minnesota District Court against Governor Tim Walz and Attorney General Keith Ellison to challenge the state’s recent ban on prediction markets related to sports, games of skill, war and terrorism, entertainment and politics. 

Walz officially signed Senate File 3432 on May 18, following approval from the Minnesota House of Representatives and Senate. By May 20, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Minnesota lawmakers in an attempt to block the criminalization of prediction market activity. 

Polymarket, which also followed Kalshi’s strategy of filing legal action against the state, alleges SF 3432 is preempted by federal law and violates the First Amendment.

“SF 3432 is the first law of its kind in the nation, criminalizing federally regulated event-contract markets,” Polymarket’s legal team said in the filing. 

“When it goes into effect in less than two months, Polymarket US will face a credible threat of imminent criminal prosecution — forcing it either to cease lawful and constitutionally protected conduct or risk felony criminal liability.”

The operator requested a preliminary injunction to avoid suffering “imminent and irreparable harm” from potential enforcement of the anti-prediction market legislation. As a result of SF 3432, the operation, servicing or advertising of event contract markets will be considered a felony offense in Minnesota by August 1. 

Polymarket continued: “Unless this Court intervenes before SF 3432 takes effect, Polymarket US will be forced to choose between continuing to communicate truthful information and risking felony prosecution, or depriving consumers of accurate information about its product, current events and the market. 

“Putting Polymarket US to this choice creates a quintessential, irreparable First Amendment injury.”

The CFTC is also seeking a preliminary injunction before the law takes effect, arguing that Minnesota is attempting to regulate markets which fall under the federal derivatives framework established through the Commodity Exchange Act.