Minnesota lawmakers have passed a public safety bill that would ban prediction markets such as Kalshi and Polymarket, sending the measure to Gov. Tim Walz for review. If signed, the law would take effect August 1.
The bill would make Minnesota one of the first states to pass a direct ban on prediction markets. Lawmakers are trying to stop platforms that offer yes-or-no markets on sports, elections, weather and other real-world events from operating in the state.
Bill treats prediction markets as illegal gambling
The proposal changes Minnesota gambling law so shares in a prediction market are not treated as exempt securities or commodities. That means the contracts would be treated as bets under state law.
The bill defines a prediction market as a system that lets consumers wager on the future outcome of an event. The definition covers events not decided by the performance of the parties to the contract, including sports, esports, public events and other future outcomes.
The measure also adds felony penalties for companies that create, operate or help run prediction markets. Advertising prediction markets could also become a felony in certain cases, including ads likely to be seen by people under 21 or ads that claim the market is legal.
Ban follows rapid growth of Kalshi and Polymarket
Prediction markets have moved quickly into sports, politics and cultural events over the past two years. Minnesota lawmakers argue the platforms look and function like gambling, even when operators describe the contracts as financial trades.
Online sports betting and online casino gambling are already illegal in Minnesota. Prediction markets have become a bigger concern because they could give residents access to event-style wagering without a state gambling licence.
The proposal also follows a local political controversy involving Kalshi. A Minnesota lawmaker placed money on his own congressional primary through the platform, adding attention to election-related markets.
Legal fight could follow
The bill is likely to draw a court challenge if Walz signs it. Prediction market operators have argued that their products fall under federal commodities law and are regulated by the Commodity Futures Trading Commission.
States have taken a different view. Gambling regulators in several jurisdictions have argued that sports and event contracts are betting products when offered to consumers in a sportsbook-style format.
Kalshi has already challenged state cease-and-desist orders in other jurisdictions, including Nevada and New Jersey. Those cases are testing whether federally regulated prediction markets can be blocked by state gambling regulators when the contracts involve sports.
