Minnesota has become the first state in the U.S. to prohibit certain prediction markets, following the approval of SF 4760 by Governor Tim Walz. This comprehensive public safety legislation includes provisions that ban prediction market contracts related to sports, politics, warfare, weather, and more.
The ban incorporates elements from Senator John Marty’s SF 4511, which had previously passed the Minnesota Senate with a vote of 56-10 on April 30. Although Marty's individual bill faced challenges in the House, its prediction market clauses were successfully integrated into SF 4760 prior to the final legislative approval.
Following the Senate's amended version passing by a margin of 57-9, the Minnesota House approved the conference committee report with a vote of 100-32.
This new law prohibits prediction market contracts associated with various events, including athletic competitions, elections, weather phenomena, warfare, terrorism, public health emergencies, legal matters, fatalities, assassinations, and entertainment events. It also extends to contracts concerning whether an individual will make a specific statement and games involving cards, dice, or electronic devices.
The legislation defines prediction markets as systems that enable consumers to wager on future outcomes. Furthermore, the prohibition will also affect services that facilitate access to these platforms, such as virtual private networks that help users bypass the restrictions.
Operators who continue to provide services in Minnesota after the law comes into force on August 1, 2026, may face felony charges.
Less than a day after the law was signed, the Commodity Futures Trading Commission (CFTC) initiated a lawsuit in the U.S. District Court of Minnesota, seeking a preliminary injunction to halt the law's implementation.
The lawsuit names Governor Walz and several Minnesota officials, including Attorney General Keith Ellison, as defendants.
The CFTC contends that prediction markets fall under federal jurisdiction and has called for urgent court intervention.
CFTC Chairman Michael S. Selig expressed concern, stating, “This Minnesota law turns lawful operators and participants in prediction markets into felons overnight. Minnesota farmers have depended on essential hedging products for weather and crop-related events for decades to manage their risks. Governor Walz prioritized special interests over American farmers and innovators.”
In its legal filing, the CFTC argued that the harm to the U.S. is irreparable and necessitates immediate injunctive relief. It emphasized that constitutional violations, including those related to the Supremacy Clause, are inherently irreparable. The CFTC warned that if Minnesota is allowed to enforce its law, the damage to the U.S. sovereign interests and regulatory authority could not be remedied after a final judgment. Therefore, preliminary injunctive relief is essential to maintain the status quo during the case's proceedings.
Prediction market operators Kalshi and Polymarket have criticized the Minnesota law following the federal lawsuit.
Kalshi spokesperson Elisabeth Diana labeled the ban a “blatant violation” of the law, stating, “Minnesota banning prediction markets is akin to attempting to shut down the New York Stock Exchange.” She added that “this actively harms users by reducing competition and pushing activities offshore.”
A representative from Polymarket noted that Minnesota’s ban contradicts the federal government’s “established framework” for regulating prediction markets.
Debates regarding whether state or federal regulators should govern this sector have already led to over 20 lawsuits. The CFTC has also taken legal action against Arizona, Wisconsin, and New York for their attempts to limit prediction market activities.
While online sports betting remains illegal in Minnesota, prediction market platforms have enabled access to sports-related event trading in regions where sports wagering is prohibited. Federal regulators categorize these products as event contracts rather than gambling products overseen by state gaming authorities.
Sports-related trading constitutes the majority of activity on some platforms, accounting for over 85% of transactions.