An anonymous reader quotes a report from NPR: Minnesota Gov. Tim Walz has signed the nation's first law banning prediction market sites from operating in the state, and in response, the Trump administration has sued, teeing up a legal battle over the most far-reaching crackdown on popular services like Kalshi and Polymarket. It comes as states confront a growing standoff with the Trump administration over how to regulate the industry, which allows people to bet on virtually anything.
The new state law makes it a crime to host or advertise a prediction market, which it defines as a system that lets consumers place a wager on a future outcome, like sports, elections, live entertainment, someone's word choice and world affairs. The prohibition extends to services supporting prediction markets, like virtual private networks, that could allow consumers to disguise their location and get around the ban. It would force prediction market sites like Kalshi and Polymarket to leave the state, or face possible felony charges. The law takes effect in August.
The law has a carve-out for event contracts that serve as an insurance policy in the event of "harm, or loss sustained" and for the purchase of securities and other commodities. The Commodity Futures Trading Commission's lawsuit seeks to block the law before it starts, arguing the prediction market industry should be exclusively regulated by federal officials. "This Minnesota law turns lawful operators and participants in prediction markets into felons overnight," said CFTC Chairman Michael Selig.
"Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last." An updated version of the prediction market bill allows trading on weather, an exception that followed pushback from the agricultural industry, which has historically used futures trading on weather as a hedge against storms and other inclement weather that can affect a harvest. Walz is expected to sign it soon. "We as a state should decide how best and what regulations we think should attach to gambling, to protect public safety, to protect our kids," said Minnesota Rep. Emma Greenman, the Democrat who introduced the measure.
Kalshi spokeswoman Elisabeth Diana called the ban a "blatant violation" of the law. "Minnesota banning prediction markets is like trying to ban the New York Stock Exchange," said Diana, adding that "this actively harms users because it reduces competition and drives activity offshore."
The new state law makes it a crime to host or advertise a prediction market, which it defines as a system that lets consumers place a wager on a future outcome, like sports, elections, live entertainment, someone's word choice and world affairs. The prohibition extends to services supporting prediction markets, like virtual private networks, that could allow consumers to disguise their location and get around the ban. It would force prediction market sites like Kalshi and Polymarket to leave the state, or face possible felony charges. The law takes effect in August.
The law has a carve-out for event contracts that serve as an insurance policy in the event of "harm, or loss sustained" and for the purchase of securities and other commodities. The Commodity Futures Trading Commission's lawsuit seeks to block the law before it starts, arguing the prediction market industry should be exclusively regulated by federal officials. "This Minnesota law turns lawful operators and participants in prediction markets into felons overnight," said CFTC Chairman Michael Selig.
"Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last." An updated version of the prediction market bill allows trading on weather, an exception that followed pushback from the agricultural industry, which has historically used futures trading on weather as a hedge against storms and other inclement weather that can affect a harvest. Walz is expected to sign it soon. "We as a state should decide how best and what regulations we think should attach to gambling, to protect public safety, to protect our kids," said Minnesota Rep. Emma Greenman, the Democrat who introduced the measure.
Kalshi spokeswoman Elisabeth Diana called the ban a "blatant violation" of the law. "Minnesota banning prediction markets is like trying to ban the New York Stock Exchange," said Diana, adding that "this actively harms users because it reduces competition and drives activity offshore."
Read more of this story at Slashdot.
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