Minnesota just moved to shut the door on online prediction markets—and the federal government is already trying to kick it back open. Gov. Tim Walz has approved the country's first law outlawing sites like Kalshi and Polymarket from operating in the state, making it a felony to host, advertise, or help Minnesotans access platforms that let users wager on future events, from sports and elections to celebrity appearances, NPR reports. The ban, which takes effect in August, also targets services like VPNs that help users mask their locations. An updated version of the bill is expected to carve out weather-related contracts after pushback from the farm sector, which uses such tools to hedge crop risks.
- "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," said state Rep. Emma Greenman, the Democratic lawmaker who introduced the measure.
The Commodity Futures Trading Commission immediately sued to block the law before it takes effect, arguing prediction markets fall under its sole authority. CFTC Chair Michael Selig says the measure would "turn lawful operators and participants … into felons overnight" and harm farmers and innovators. Kalshi and Polymarket call the move illegal and anti-competitive. Minnesota is the first state to enact an outright ban, but similar crackdowns have been proposed in seven others.
The CFTC has also sued Arizona, Connecticut, Illinois, and New York over their attempts to regulate prediction markets, Gizmodo reports. "The states are using any tactic they can to go after the prediction market companies," Melinda Roth, a professor at Washington and Lee University's School of Law, tells NPR. "But they've embarked on a too big to fail strategy and have become quite mainstream. It will be hard to put that genie back in the bottle."
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