Minnesota Becomes First State to Ban Prediction Markets, Triggering Federal Lawsuit

Governor Tim Walz just signed a bill that makes Minnesota the first state in the country to outright ban "prediction markets."

Platforms like Kalshi and Polymarket have created a multibillion-dollar industry by letting people "buy and sell financial contracts" on real-world outcomes. Minnesota's Attorney General Keith Ellison and local lawmakers argue this is just a clever workaround for unregulated gambling.

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Ellison released a statement: "I'm very concerned about the harms of prediction markets on Minnesotans. Prediction markets are designed to be addictive and prey especially on young people and low-income folks. They help the ultra-rich get richer and the rest of us get poorer."

Because these apps technically sell financial contracts instead of traditional sports bets, they have managed to operate right here in Minnesota, even though online sports gambling is still illegal in our state.

Less than 24 hours after the bill was signed, the federal government filed a federal lawsuit to block Minnesota's ban entirely. The feds say Congress gave them the exclusive right to regulate these kinds of prediction markets, meaning individual states can't just pass a law to shut them down.

If the State successfully argues its court case, the new law will take effect in August. It would make it a felony to run, host, or advertise one of these apps in the state.