Minnesota may be the first state to outlaw prediction markets. Here's what to know
MINNEAPOLIS - Minnesotans using platforms like Kalshi and Polymarket won't be able to cast bets on who will win the governor's race or how many posts Elon Musk will make on X in a given week for much longer.
A public safety bill that includes a ban on prediction markets is headed to Gov. Tim Walz's desk. If it's signed into law, Minnesota would be the first state in the country to outlaw the popular platforms that allow users to bet on the outcome of real-world events from elections to storms.
The bill, one of the few bipartisan proposals to see action during Minnesota's legislative session, passed Tuesday night by a wide margin in the House and Senate.
Online sports betting and online casino gambling are already illegal in Minnesota. State lawmakers say prediction markets are skirting state law by contending that transactions on the websites are "trades," not bets.
Prediction markets are nothing more than gambling, said Sen. John Marty, DFL-Roseville, in a news release earlier this month, highlighting the bill's bipartisan support.
"I'm concerned that the rapid increase in access to prediction markets will create a spike in gambling addiction and financial loss, hurting Minnesota families," Marty said. "It will dramatically cut into the revenue of Minnesota's regulated gambling, including charitable gambling, casinos, and racetracks."
The law would take effect Aug. 1.
Here's what to know about prediction markets.
Prediction markets are essentially gambling platforms that allow for "trading" on the outcome of sports games, political races and other cultural events - even though most proposition, or "prop," bets are illegal in Minnesota. Popular platforms include Kalshi and Polymarket.
Users can bet on the outcome of the Timberwolves playoffs and who the 2028 presidential nominees will be. Other predictions are more far-fetched, like when the United States government will confirm the existence of aliens and whether Jesus Christ will return before 2027.
Lawmakers in states like Nevada and New Jersey have gone after the markets, which they consider a form of illegal gambling, said Ryan Butler, a senior editor at sports betting site Covers.com. The interfaces are remarkably similar to that of online sportsbooks, he added.
"They look and act and feel a lot like sports betting. The difference is that so far ... the federal government backs up the claim that these are more like trading stock on Robinhood than it is placing an illegal sports bet," Butler said.
Like sports betting, most of the money to be made on prediction sites is won by a small group. A recent Wall Street Journal analysis found that 67% of profits on Polymarket go to just 0.1% of accounts. On Kalshi, unprofitable users outnumber profitable ones by nearly three to one, the paper reported.
A Minnesota lawmaker made headlines last month for spending $50 to bet on the outcome of his own election.
Kalshi and Polymarket are federally regulated by the Commodity Futures Trading Commission (CFTC).
The agency is charged with guarding against market manipulation and insider trading.
"These platforms operate as federally regulated exchanges with clearinghouses and comprehensive investor protections, identical to those found in other derivatives markets," CFTC Commissioner Michael S. Selig wrote in a Wall Street Journal op-ed earlier this month. "The agency has a proven track record in preventing and enforcing actions against insider trading."
In a social media post Wednesday criticizing the Minnesota bill, Kalshi spokeswoman Elisabeth Diana argued CFTC regulation makes prediction markets just as safe as other forms of legal gambling.
"Peak hypocrisy: MN banning prediction markets while its gov't collects millions a year from slot machines, poker games, roulette tables, and casino games. Does anyone believe that casinos are safe and well-regulated, but CFTC-registered exchanges and clearinghouses are not?" she wrote.
State lawmakers have argued that the markets skirt state laws that ban other types of betting. There are concerns that prediction markets will lead to an uptick in addictive behaviors, especially among young people.
The platforms have also made headlines for insider trading by bad actors. Last month, a U.S. Army special forces soldier who helped capture Venezuelan leader Nicolás Maduro was charged with using classified intel to bet on the mission on Polymarket. He made more than $400,000, authorities said.
The New York Times found dozens of long-shot bets on Polymarket that showed signs of insider trading.
Both Polymarket and Kalshi have said they are committed to investigating insider trading.
It is expected the CFTC or the platforms themselves will challenge the ban in court, as they have in about a dozen states attempting other versions of bans.
Various courts around the country have taken up cases, and the issue will likely end up in the Supreme Court, Butler said.
New Jersey and Nevada, two of the biggest gambling states in the U.S., have led the way. The Third Circuit, which includes New Jersey, ruled in favor of prediction markets. A decision is still to come in the Ninth Circuit, which covers Nevada, but it's believed the ruling will be against prediction markets, Butler said.
"In that case, where you have the Third Circuit supporting prediction markets and the Ninth Circuit opposing them, then the Supreme Court has to rule," he said. "Because of the attention they are getting, it's very likely that they do take up that case."
Using the platforms should not be seen as a way to make money or as an alternative to investments, Butler said.
If you treat it as a way to spend disposable income, there is no difference between spending $20 a month on Netflix and spending $20 a month on trades on a Twins game, he said.
"If users get entertainment out of it, that's great, do it responsibly," Butler said. "Do it within your means. And again, do not expect to win."
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This story was originally published May 13, 2026 at 8:48 PM.