Minnesota set to become the first US state to ban prediction markets

• Minnesota has become the first state in the US to ban prediction market platforms officially
• The draft law was passed with overwhelming support by the state legislature and awaits Gov. Tim Walz’s signature
• SF 4760 clearly defines what constitutes a prediction market, and classifies operations, facilitating or hosting such platforms, as a felony

Minnesotahas made history by becoming the first state in the US to ban prediction market platforms outright.

This comes after two years of intense to-and-fro among gaming regulators, the Commodity Futures Trading Commission (CFTC), attorneys general, and the platforms themselves across the nation.

Minnesota makes history, flips the switch on prediction markets

The bill - SF 4760 - outlaws the activity and was passed on Tuesday and now awaits Gov. Tim Walz’s signature to come into effect. Should the governor stamp it, the new law will take effect on August 1, 2026, giving plenty of time for prediction markets to push back if they disagree, albeit any such contest would have to be resolved by the courts.

SF 4760 also legally defines what constitutes a prediction market, ensuring that there is no room for frivolous interpretations:

"A system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract."

To avoid confusion, the bill also enumerates the types of real-world events that may be tied to a "trade," including sports and esports, elections and government actions, legal proceedings, weather events, public health crises, wars and national emergencies, mass casualty events, assassinations, pop culture outcomes, and pointedly - whether a person would make a specific statement, a nod to fears that people can easily manipulate prediction markets.

The original draft of the bill did not include any mention of prediction markets, but was later amended to target platforms such as Kalshi and Polymarket, effectively prohibiting them from operating locally.

While the amendment sent the bill back for another vote in the Senate, it passed the upper chamber with an overwhelming support - 57-9, followed by a 100-32 vote in the House.

Furthermore, the bill establishes the operation, creation, or facilitation of prediction market activity as a felony, raising the stakes for platforms that do that.

Efforts to crack down on the sector across the US have usually triggered pre-emptive lawsuits, with Kalshi usually leading the vanguard.

Minnesota cannot expect prediction market platforms, the CFTC, to go quietly

Much like in the case of a crackdown against an illegal gambling sector, Minnesota will seek to go after anyone who may be aiding the prediction market ecosystem, be that a payment processor, data verification services, or any firm that provides technical or other support to a prediction market platform.

Authorities may now legally issue cease-and-desist orders or seek injunctions against platforms that operate in the vertical. Minnesota’s new law could have teeth as it focuses on the sector outright rather than making claims that it should be regulated under state gaming laws.

This does not mean that the CFTC will simply feel content with the local developments. The regulator has already raised issues over gaming regulators trying to preempt federal authority, and has previously launched lawsuits against multiple states, their governors, and attorneys general.

Prediction market platforms have also faced multiple lawsuits.

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