Minnesota passes prediction markets ban

Source: Engadget

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Background

Minnesota is the latest state to try to curtail the activities of prediction markets such as Kalshi and Polymarket. Governor Tim Walz signed a bill that includes several public‑safety provisions, including a ban on those markets operating within the state. The provisions are slated to take effect on August 1, but they are already facing legal challenges.

Legal challenges

This appears to be the first attempt by a state to regulate prediction markets via legislation rather than lawsuits. However, the lawsuits have not gotten off to a good start. Three states that have pursued legal cases against these businesses were sued by the U.S. Commodity Futures Trading Commission (CFTC), which claims that only it has the authority to oversee prediction markets. The CFTC also filed an amicus brief last week to intervene in an additional lawsuit in Ohio.

Federal regulator response

The federal regulator has also weighed in on the Minnesota law. Rather than making the same argument as in the other states, the CFTC’s argument is that the law would prevent weather‑related predictions made by farmers to hedge against crop losses. NPR reported that an updated version of the law with an exception for that agricultural application is likely to be approved.