Minnesota bans prediction markets, first state to outlaw such platforms

(AsiaGameHub) –   Governor Tim Walz has enacted legislation that criminalizes platforms such as Kalshi and Polymarket.

U.S.- Minnesota has officially banned prediction markets, becoming the first U.S. state to make platforms facilitating the purchase and sale of contracts linked to future political, economic, or social outcomes illegal. The measure was signed by Governor Tim Walz after securing strong bipartisan support and is set to take effect on August 1, 2026.

While other states have issued cease-and-desist notices or regulatory warnings, Minnesota’s new law establishes a general ban on the operation and advertising of prediction markets not authorized by the state. Markets focused on weather-related events remain permitted, following agricultural stakeholders’ insistence on the importance of such data for risk management.

CFTC response

The move comes amid a conflict between state-level authorities and the Commodity Futures Trading Commission (CFTC), which views prediction markets as financial products. Anticipating the governor’s signature, the CFTC filed a federal court lawsuit seeking to block the law before it becomes active.

In a statement, Chairman Michael S. Selig described Minnesota’s action as “the most aggressive move by a state to shut down CFTC-regulated markets and undermine the federal regulatory framework established by Congress more than 50 years ago.”

Selig warned that the legislation would turn lawful operators and participants into “felons overnight” and criticized the state for ignoring the role prediction markets play in providing hedging tools for farmers and innovators. The CFTC has already sued other states, including Arizona, Connecticut, Illinois, and New York, over attempts to regulate or ban prediction markets.

Supporters of the Minnesota bill argue that gambling regulation should remain a state prerogative. Representative Emma Greenman, who sponsored the legislation, said: “We as a state should decide what regulations to apply to gambling and how best to do so, to protect public safety and our kids.”

Platforms and controversies

Prediction market operators like Kalshi and Polymarket reject the characterization of their products as gambling, instead asserting they are financial instruments with historical precedent. They maintain that state gaming laws should not apply to their operations.

The controversy has been fueled by cases of insider trading, where individuals with non-public information profited from wagers on geopolitical events. A recent example involves the arrest of a U.S. special operations soldier accused of making over US$400,000 betting on Venezuelan political outcomes while allegedly involved in covert missions.