Minnesota has made history as the first state in the U.S. to impose a ban on specific prediction markets after Governor Tim Walz sanctioned the omnibus public safety bill SF 4760, which incorporates terms to forbid prediction market contracts across sectors such as sports, politics, warfare, climate, and more.
This legislation also includes elements from Senator John Marty’s SF 4511, which was previously ratified by the Minnesota Senate with a decisive 56-10 vote on April 30. Although Marty’s independent bill faltered in the House, its prediction market clauses found their way into SF 4760 for final approval.
The Minnesota House ratified the conference committee report with a notable 100-32 vote following the Senate’s endorsement of the revised draft by a 57-9 margin.
This new law prohibits prediction market contracts related to sports events, elections, climate conditions, military actions, terrorism, public health emergencies, legal cases, fatalities, assassinations, and entertainment-related occurrences. It extends to contracts on whether a person will make a specified statement and includes games played with cards, dice, or digital equipment.
According to the legislation, prediction markets are characterized as systems permitting consumers to wager on future results. The ban further includes services that facilitate access to these platforms, such as virtual private networks which enable users to mask their locations and circumvent the prohibition.
Operators who continue to provide services in Minnesota after the law takes effect on August 1, 2026 may confront felony charges.
CFTC Challenges Legislation in Federal Court
Merely 24 hours after Governor Walz enacted the law, the Commodity Futures Trading Commission (CFTC) initiated a lawsuit in the Minnesota U.S. District Court, requesting a preliminary injunction to prevent the law from being implemented.
The lawsuit targets Walz and several officials from Minnesota, including Attorney General Keith Ellison.
The CFTC contends that prediction markets are under federal jurisdiction and has sought prompt legal intervention.
“This Minnesota law promptly criminalizes lawful operators and participants in prediction markets,” stated CFTC Chairman Michael S. Selig. “Farmers across Minnesota have depended on crucial hedging instruments for climatic and crop-related occurrences to manage their financial risks for years. Governor Walz prioritized select interests over American farmers and innovators.”
Within its legal filing, the CFTC emphasized: “Injury to the United States is irreparable and necessitates immediate injunctive relief. Violations of constitutional rights, including breaches of the Supremacy Clause, are inherently irreparable. Furthermore, if Minnesota is allowed to enforce its law, the ramifications on the sovereign interests and regulatory authority of the United States could be irreversible after a final ruling. A preliminary injunction is essential to maintain the status quo during the proceedings.”
Industry Operators Stand Against the Ban
Prediction market firms Kalshi and Polymarket have voiced objections to the Minnesota regulation following the federal lawsuit.
Kalshi’s spokesperson Elisabeth Diana termed the prohibition a “clear infringement” upon the law.
“Banning prediction markets in Minnesota is akin to attempting to outlaw the New York Stock Exchange,” Diana pointed out, emphasizing that “this will overall harm users by diminishing competition and encouraging offshore activity.”
A representative from Polymarket expressed that Minnesota’s ban is at odds with the federal government’s “designed framework” for governing prediction markets.
Debates surrounding whether state or federal authorities should oversee this sector have already precipitated more than 20 legal challenges. The CFTC has also taken legal action against Arizona, Wisconsin, and New York regarding attempts to limit prediction market operations.
Sports Contracts Remain Integral to Trading Activities
While online sports betting is prohibited in Minnesota, prediction market platforms offer access to trading on sports-related events in areas where sports wagering is banned.
Federal regulatory bodies categorize these products as event contracts, distinctly separate from gambling products overseen by state gaming authorities.
Sports-related transactions constitute the bulk of activities on several platforms, with over 85% of Kalshi’s trading volume associated with sporting events, particularly parlays that comprise multiple outcomes such as points, fouls, and passing plays.
In Nevada, a judge previously determined that Kalshi’s sports event contracts were “indistinguishable” from state-regulated sports betting, compelling the company to pause sports trading within the state.
Minnesota Representative Emma Greenman, who introduced the ban, affirmed that states should dictate the regulations governing gambling practices.
“We, as a state, should define the most effective regulations attached to gambling, ensuring public safety and the protection of our youth,” Greenman stated.
More States Exploring Similar Restrictions
According to the National Conference of State Legislatures, lawmakers in 14 additional states have proposed bills targeting prediction markets. Currently, Hawaii and North Carolina are advancing legislation aimed at statewide prohibitions.
An updated version of the Minnesota law has since included an exception permitting weather-related trading following opposition from agricultural groups who traditionally utilize weather futures to safeguard against storms and crop losses. The law also incorporates exemptions for event contracts functioning as insurance against “harm or loss faced” and for securities and commodities transactions.
Experts in the industry note that legal disputes have not curtailed activity on prediction market platforms.
“States are deploying all available tactics to challenge prediction market companies,” remarked Melinda Roth, a scholar at Washington and Lee University School of Law who analyzes the sector. “However, they’ve embraced a too-large-to-fail strategy, which has entrenched itself within mainstream operations. It will be challenging to revert this progress.”