Minnesota Criminalizes Prediction Markets Like Kalshi and Polymarket

Minnesota Governor Tim Walz signed the nation's first law banning prediction market sites, prompting the Trump administration to sue, setting up a federal legal battle over state versus federal regulatory authority.

Objective Facts

On May 18, 2026, Minnesota Governor Tim Walz signed a public safety bill (SF4760) into law that makes Minnesota the first state to outlaw prediction markets, with the law taking effect August 1. The law makes it a felony to host, create or advertise a prediction market in the state, and extends to anyone providing 'supportive services' or data to the platforms. Federal authorities at the Commodity Futures Trading Commission filed a lawsuit Tuesday aiming to stop the law from going into effect, arguing that prediction markets fall under federal oversight. Minnesota Attorney General Keith Ellison countered that prediction markets are 'designed to be addictive and prey especially on young people and low-income folks.'

Left-Leaning Perspective

Minnesota Rep. Emma Greenman, the Democrat who introduced the bill, told ABC News on Wednesday that 'We're seeing studies come out that say [the companies] are targeting 18- to 21-year-olds and we are seeing gambling starting younger and younger.' Minnesota Attorney General Keith Ellison, also a Democrat, argued that 'Prediction markets are designed to be addictive and prey especially on young people and low-income folks' and 'help the ultra-rich get richer and the rest of us get poorer.' Critics on the left argue that prediction markets encourage nonstop wagering by making betting accessible through mobile apps and presenting gambling activity as financial trading, and contend that the platforms can worsen gambling problems in states where sports betting remains illegal. A Wall Street Journal analysis found that 67% of profits on Polymarket go to just 0.1% of accounts, and on Kalshi unprofitable users outnumber profitable ones by nearly three to one. Left-leaning coverage emphasizes that prediction markets have given access to sports betting to people in states where the activity is prohibited by operating as 'event contracts' rather than gambling, and notes that on Kalshi more than 85% of trading activity is related to sporting events.

Right-Leaning Perspective

Minnesota Republicans Drew Roach and Nolan West criticized the ban itself, with Roach calling it 'a great overstep' and 'a sad day for Minnesotans,' and West saying the prediction market language would force him to oppose the entire bill. The Trump administration argues that prediction markets are in the federal domain and should be regulated by the Commodities Futures Trading Commission, and Kalshi and other major platforms have agreed with this position. Rep. Nolan West warned lawmakers that banning prediction markets would shift activity 'into the shadows,' arguing that 'thousands of Minnesota residents used prediction markets' and that 'prohibition doesn't work.' Kalshi spokeswoman Elisabeth Diana said banning prediction markets is a 'blatant violation' of law, comparing it to 'trying to ban the New York Stock Exchange,' and argued that the ban 'actively harms users because it reduces competition and drives activity offshore.' Right-leaning coverage notes that former CFTC members and legal experts say bets on football games, words President Trump might say during a press conference, and whether Ricky Martin will make an appearance at the Super Bowl are matters 'far outside' the CFTC's traditional scope, questioning the broader regulatory framework rather than focusing on harm.

Deep Dive

Minnesota is not just banning prediction markets; it is challenging the legal framework that lets event-contract platforms operate outside the traditional state-by-state gambling model and answering a question regulators have circled for years: are prediction markets financial exchanges, gambling platforms, or a new category that sits awkwardly between the two? The core issue emerged because the Trump administration regulates prediction sites as 'event contracts' rather than gambling, which typically is overseen by state gaming authorities, allowing these platforms to operate nationwide even in states with sports betting bans. Both sides have substantive legal arguments: the CFTC claims exclusive jurisdiction under the Commodity Exchange Act, but former CFTC members and legal experts say bets on football games and pop culture outcomes fall 'far outside' the CFTC's traditional scope of regulating commodity futures. The uncomfortable truth is that both sides have a point—event contracts can have legitimate forecasting value and serious arguments exist for treating some as financial products, but once the market moves into sports, elections, and pop culture outcomes, the consumer experience looks much closer to gambling, and that is the problem Minnesota is trying to force into the open. The CFTC has filed a lawsuit arguing that Minnesota's law violates the U.S. Constitution by criminalizing at the state level the operation of derivatives markets governed by federal law, and is seeking a preliminary injunction to stop the law from going into effect on August 1, 2026.

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Minnesota Criminalizes Prediction Markets Like Kalshi and Polymarket

Minnesota Governor Tim Walz signed the nation's first law banning prediction market sites, prompting the Trump administration to sue, setting up a federal legal battle over state versus federal regulatory authority.

May 20, 2026· Updated May 21, 2026
What's Going On

On May 18, 2026, Minnesota Governor Tim Walz signed a public safety bill (SF4760) into law that makes Minnesota the first state to outlaw prediction markets, with the law taking effect August 1. The law makes it a felony to host, create or advertise a prediction market in the state, and extends to anyone providing 'supportive services' or data to the platforms. Federal authorities at the Commodity Futures Trading Commission filed a lawsuit Tuesday aiming to stop the law from going into effect, arguing that prediction markets fall under federal oversight. Minnesota Attorney General Keith Ellison countered that prediction markets are 'designed to be addictive and prey especially on young people and low-income folks.'

Left says: Minnesota Attorney General Keith Ellison stated that prediction markets are 'designed to be addictive and prey especially on young people and low-income folks' and 'help the ultra-rich get richer and the rest of us get poorer.'
Right says: Rep. Nolan West argued 'This is a very bad idea, chiefly because we do not have the authority as a state to do so' and predicted that 'Every state that does so is starting to lose that litigation.'
✓ Common Ground
Even most Senate Republicans agree that prediction markets present a gray area legally and that closing loopholes is urgent, with Sen. Jordan Rasmusson stating 'we are seeing the rapid expansion of these prediction markets, we are seeing an expansion of corruption that follows.'
Both left and right acknowledge concerns about conflicts of interest in the regulatory process, with coverage noting that Donald Trump Jr., President Donald Trump's eldest son, is an adviser to both Polymarket and Kalshi.
Some Minnesota lawmakers across the political spectrum who support legalizing sports betting voted for the prediction market ban because they want more say in how sports gambling is regulated in their state rather than having federal rules determine the issue.
Both sides acknowledge concerns about insider trading on the platforms, with coverage noting that 'the platforms have also received scrutiny for the presence of insider trading — or bets that look suspiciously like insider trading — that gives certain bettors an inside track on profits.'
Objective Deep Dive

Minnesota is not just banning prediction markets; it is challenging the legal framework that lets event-contract platforms operate outside the traditional state-by-state gambling model and answering a question regulators have circled for years: are prediction markets financial exchanges, gambling platforms, or a new category that sits awkwardly between the two? The core issue emerged because the Trump administration regulates prediction sites as 'event contracts' rather than gambling, which typically is overseen by state gaming authorities, allowing these platforms to operate nationwide even in states with sports betting bans.

Both sides have substantive legal arguments: the CFTC claims exclusive jurisdiction under the Commodity Exchange Act, but former CFTC members and legal experts say bets on football games and pop culture outcomes fall 'far outside' the CFTC's traditional scope of regulating commodity futures. The uncomfortable truth is that both sides have a point—event contracts can have legitimate forecasting value and serious arguments exist for treating some as financial products, but once the market moves into sports, elections, and pop culture outcomes, the consumer experience looks much closer to gambling, and that is the problem Minnesota is trying to force into the open. The CFTC has filed a lawsuit arguing that Minnesota's law violates the U.S. Constitution by criminalizing at the state level the operation of derivatives markets governed by federal law, and is seeking a preliminary injunction to stop the law from going into effect on August 1, 2026.

◈ Tone Comparison

Left-leaning officials like Minnesota Attorney General Keith Ellison used stark, values-based language describing markets as 'designed to be addictive' and helping 'the ultra-rich get richer.' By contrast, Kalshi used sarcastic language, calling Minnesota's ban 'peak hypocrisy' and questioning the logic of treating casinos differently from CFTC-regulated exchanges.