Minnesota lawmakers approved legislation Tuesday that would ban prediction market operations in the state, passing what would be the first explicit state-level prohibition and setting up a likely legal challenge with these platforms and the federal government.
- Minnesota lawmakers passed what would become the nation’s first explicit state-level prediction market ban, sending the bill to Gov. Tim Walz.
- The legislation would prohibit prediction market trades tied to sports, politics, and pop culture, with supporters framing it as a state sovereignty issue.
- Legal challenges are expected as the CFTC and operators such as Kalshi continue asserting federal authority over prediction markets.
The prediction market language was included in a wide-ranging public safety bill days before the legislature was set to conclude its 2026 session. The standalone bill had passed the Senate with widespread bipartisan support, but it was not scheduled to be taken up by the House.
If passed, the bill would ban prediction market operators from accepting trades on sports, political events, pop culture, and a host of other areas.
Prediction markets’ inclusion in the public safety bill was criticized by several Republican members ahead of the final vote. Along with the legislative maneuvering, Rep. Drew Roach criticized a prediction market ban as a concept.
“I think it’s a great overstep,” Roach said. “It’s a sad day for Minnesotans and how we’re legislating.”
Rep. Nolan West said the prediction market language would force him to oppose the bill overall. He said thousands of Minnesota residents used prediction markets, providing an economic utility for the state that would spark black market participation if banned.
“Unfortunately, prohibition doesn’t work. If prohibition worked, we’d live in a utopia where we’d prohibit all bad things,” West said. “But when you prohibit things, you just move them into the shadows. That's what will happen here.”
Democratic-Farmer-Labor Party Rep. Emma Greenman countered that Minnesotans had the sole authority to regulate gambling, not the federal government. Minnesota has tribal casinos, two horse tracks, a state lottery and a regulated charitable gaming industry, but is one of 11 states without legal sports betting.
“This (bill) is asserting Minnesotans’ authority to do what we’ve always done, which is to say how best and what regulations we think we should attach to gambling to protect public safety and our kids and the gambling itself,” Greenman said.
The amended public safety bill with the prediction market ban language passed the House 100-32 Tuesday, hours after it passed the Senate 57-9.
The legislation will be sent to Gov. Tim Walz, who will likely sign the bill into law or allow it to pass without his signature. The lopsided margins in both chambers mean there is enough political support to override a potential veto.
Future challenges
The bill is set to take effect Aug. 1. Prediction markets or the federal government will presumably file lawsuits well before then, as has been the case in recent prediction market news.
The Commodity Futures Trading Commission (CFTC), which oversees prediction markets, has aggressively challenged state attorneys general and gaming regulators who have sought to prohibit prediction markets. The CFTC maintains it is the sole overseer of these platforms and such state-level regulatory crackdowns violate federal sovereignty.
Leading prediction markets such as Kalshi, Robinhood, and Crypto.com are also fighting more than a dozen court battles in states that see their platforms as illegal gambling operators.
Rep. West alluded to potential lawsuits in his floor address ahead of the vote. Minnesota could be set up for a largely meaningless, prolonged legal battle as earlier legal battles near a final legal determination in the Supreme Court.
“This is a very bad idea, chiefly because we do not have the authority as a state to do so,” West said before casting his vote against the prediction market ban. “Every state that does so is starting to lose that litigation. This is going to cost the state who knows how much in legal fees for no actual gain.”
