Minnesota Ban Sparks New Fight Over Prediction Markets

Minnesota Passes New Restrictions

Minnesota is the first US state to ban several prediction market types. Governor Tim Walz signed the law under SF 4760 this week. Lawmakers added the rules into a larger public safety bill after earlier plans failed in the Senate.

The law targets contracts based on future public events. These include sports, elections, weather, wars, terrorism, and entertainment events. It also bans contracts linked to deaths, court cases, and health emergencies. Another rule blocks tools that help users hide their location, such as VPN services.

Operators that continue after August 1, 2026, could face felony charges. This has increased pressure on companies in the sector. The law also adds a few small exemptions, mainly for risk management. These are limited and tightly defined.

• Weather contracts used in farming protection

• Insurance-style contracts for financial risk

• Some securities and commodity-related contracts

Federal Regulators File Lawsuit

The Commodity Futures Trading Commission filed a lawsuit one day after the law passed. It asked a federal court to stop Minnesota from enforcing it. The agency says prediction markets fall under federal control, not state control.

The lawsuit names Governor Walz and other state officials. CFTC Chair Michael S. Selig said weather contracts are useful for farmers to manage risk. Federal lawyers also warn that the law could weaken national rules if other states follow.

State officials disagree. They say gambling-related products should be controlled locally, not by federal agencies.

Companies Push Back Against the Ban

Kalshi and Polymarket both criticized the new rules. They say the law could push users to offshore platforms instead.

Sports contracts are the biggest part of prediction market trading. More than 85% of Kalshi activity comes from sports-related bets. These include outcomes like fouls, passes, and final scores.

This overlap with sports betting has raised concern among regulators. Some other US states are now reviewing similar laws. Even with exemptions, uncertainty remains high. Courts may now decide how much power states really have over prediction markets.