Minnesota has become the first US state to enact a law banning prediction market platforms from operating within its borders.
Gov. Tim Walz signed the legislation that now makes it a crime to host or advertise prediction market services in the state, something that directly targets operators such as Kalshi and Polymarket.
The bill was passed in the House with votes of 100-32, while also in the Senate at 57-9, and is due to come into effect on August 1, 2026.
"We as a state should decide how best and what regulations we think should attach to gambling, to protect public safety, to protect our kids," argued State Representative Emma Greenman, the Democratic sponsor of the legislation.
Co-author of the bill, Sen. Jordan Rasmusson, R-Fergus Falls added: "It's important that the state of Minnesota puts a marker in the sand and say that the Legislature should be able to debate and look at what forms of gambling we want to legalize."
What is the law that's been put in place?
The law defines the system as a place that allows consumers to place a wager on future outcomes like sports, elections, live entertainment, or politics and world affairs.
However, an updated version of the bill will allow trading on weather outcomes. This is because the agricultural industry in the state has historically hedged against bad weather that would negatively impact their harvest.
Something, it appears, they've been successful with their appeal. Walz is expected to sign this soon. However the Trump administration has already filed a lawsuit seeking to block the law from taking effect.
Prediction markets need to be regulated by the CFTC instead of being banned
The bill has faced strong condemnation from supporters of prediction markets, one of which is the Commodity Futures Trading Commission Chairman (CFTC), Michael Selig. He argues that it should be only regulated by federal officials.
"This Minnesota law turns lawful operators and participants in prediction markets into felons overnight," stated Selig. "Governor Walz chose to put special interests first and American farmers and innovators last."
The ongoing debate: Do prediction markets = gambling?
Kalshi, one of the most popular providers of prediction markets in the United States, called the ban 'peak hypocrisy.' Head of Communications at Kalshi, Elisabeth Diana, went even further in a strongly worded statement:
"Does anyone believe that casinos are safe and well-regulated, but CFTC-registered exchanges and clearinghouses are not? It's illegal to bank federally regulated exchanges (imagine one single state banning access to the New York Stock Exchange). This move would hurt Minnesotans and push them to offshore, unsafe markets."
It's likely the legal battle for this will continue. Currently, Nevada is the only state with a court-ordered temporary ban against a prediction market operator, in this case Kalshi - which has been extended.
In Utah, which has a complete ban on gambling, they recently passed a law that banned proposition betting which they define as a 'gambling bet on an individual action, statistic, occurrence, or non-occurrence.'
The language of this suggests the ban applies to the bets themselves and not the betting platforms that provide the service, making prediction platforms still legal. One thing is for certain, this Minnesota ban is likely to be dragged through the courts for some time to come.
