Minnesota becomes first US state to outlaw prediction markets
Governor Tim Walz has signed a bill that criminalises platforms like Kalshi and Polymarket.
U.S.- Minnesota has formally outlawed prediction markets, becoming the first US state to criminalise platforms that allow the buying and selling of contracts tied to the outcomes of future political, economic, or social outcomes. The measure was signed by Governor Tim Walz after passing with strong bipartisan support and is scheduled to take effect on August 1, 2026.
While other states have issued cease-and-desist letters or regulatory warnings, Minnesota’s new law establishes a general prohibition on the operation and advertising of prediction markets not sanctioned by the state. Markets on weather-related events remains permitted, after agricultural stakeholders insisted 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 takes the view that prediction markets offers a financial product. Anticipating the governor’s signature, the CFTC filed a lawsuit in federal court seeking to block the law before it comes into force.
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 regime set up by Congress more than 50 years ago.”
Selig warned that the legislation would turn lawful operators and participants into “felons overnight”, and criticised the state for disregarding the role prediction markets have played 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 how best and what regulations we think should attach to gambling, to protect public safety, to protect our kids.”
Platforms and controversies
Prediction market operators such as Kalshi and Polymarket reject the characterisation of their products as gambling, arguing instead that they are financial instruments with historic precedent. They maintain that state gaming laws should not apply to their operations.
The controversy has been fuelled by cases of insider trading, where individuals with non-public information profited from wagers on geopolitical events. Recent examples include the arrest of a US special operations soldier accused of making over US$ 400.000 betting on Venezuelan political outcomes while allegedly involved in covert missions.
