May 20, 2026
Minnesota Governor Tim Walz signed a bill into law this week that would make the state the first in the U.S. to ban prediction markets. But less than 24 hours later, a legal challenge was filed that could render the legislation moot.
The Commodity Futures Trading Commission (CFTC), a federal agency, has asked a federal court to prevent Minnesota from implementing a prohibition on companies like Polymarket and Kalshi, which is currently set to take effect on August 1.
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“This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” CFTC Chairman Michael S. Selig said in a statement. “Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks.”
Protecting children
The law makes it a crime to host or advertise a betting platform that isn’t authorized by the state, such as the tribal gaming allowed in Minnesota. Democratic state rep Emma Greenman sponsored the bill.
“It is critical we act this year to address this explosion of gambling on almost anything and rein in these Big Tech billionaires who skirt the law to circumvent our state authority and hurt our children just to line their own pockets,” she said in a statement last month.
The CFTC argues the law is too broad in scope. The agency has sued five other states to block their attempts to regulate prediction markets, saying oversight is the responsibility of the federal government, not the states.
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Whales and suckers
Minnesota’s law comes as scrutiny of prediction markets intensifies. A recent study by The Wall Street Journal found that 67% of profits on Polymarket, one of the leading prediction markets, go to just 0.1% of accounts. Of the 1.6 million accounts studied, more than 1.1 million were unprofitable.
On Kalshi, there are 2.9 unprofitable users for every profitable one.
These markets have also proven to be a convenient vehicle for people with inside information to profit.
For example, a soldier in the U.S. Special Forces placed a wager using classified information about the planned removal of Venezuelan leader Nicolas Maduro and reportedly earned more thanr $400,000. He was later arrested.
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Polymarket stopped operating in the U.S. in 2022 amid concerns about market manipulation and its lack of a license. Last July, however, the Justice Department and CFTC ended investigations launched during the Biden administration, and the company has been slowly re-entering the U.S. market.
Prediction markets have received a warmer reception in Washington since Trump returned to office. (Donald Trump Jr is a paid advisor to both Kalshi and Polymarket.)
It hasn’t been entirely smooth sailing, though.
Earlier this month, the U.S. Securities and Exchange Commission delayed the expected launch of the first exchange-traded funds linked to prediction markets. Regulators are seeking additional information about how the funds are structured and asking for more detailed disclosures.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Commodity Futures Trading Commission (1); Minnesota House of Representatives (2); The Wall Street Journal (3); The New York Times (4); Reuters (5)
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Chris Morris is a veteran journalist with more than 35 years of experience at many of the internet's biggest news outlets. In addition to his activities as a writer, reporter and editor, Chris is also a frequent panel moderator and speaker at major conferences, including CES and South by Southwest.
