Minnesota Becomes First State To Ban Prediction Markets

Source: Slashdot

Details of the Law

• The law makes it a crime to host or advertise a prediction market, defined as a system that lets consumers place a wager on a future outcome (e.g., sports, elections, live entertainment, someone’s word choice, and world affairs).
• The prohibition extends to services that support prediction markets, such as virtual private networks (VPNs), which could allow users to disguise their location and evade the ban.
• Prediction‑market sites like Kalshi and Polymarket would have to leave Minnesota or face possible felony charges.
• The law takes effect in August.

Carve‑outs

• Event contracts that serve as insurance policies for “harm, or loss sustained.”
• Purchase of securities and other commodities.

The Commodity Futures Trading Commission (CFTC) has filed a lawsuit seeking to block the law before it takes effect, arguing that the prediction‑market industry should be regulated exclusively by federal officials. CFTC Chairman Michael Selig said, “This Minnesota law turns lawful operators and participants in prediction markets into felons overnight.”

Industry Response

Kalshi spokeswoman Elisabeth Diana called the ban a “blatant violation” of the law. She compared it to “trying to ban the New York Stock Exchange,” adding that the ban “actively harms users because it reduces competition and drives activity offshore.”

Political Reactions

• Minnesota Rep. Emma Greenman (D), who introduced the measure, said, “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.”
• Critics argue the ban could hurt Minnesota farmers, who have relied on hedging products for weather and crop‑related events for decades. An updated version of the bill now allows trading on weather after pushback from the agricultural industry.
• Governor Walz is expected to sign the revised version soon.

The law marks a significant escalation in the debate over state versus federal authority in regulating prediction markets.