Minnesota has become the first state to enact legislation banning prediction market betting apps, sparking a legal challenge from industry players and federal regulators. The measure, which passed in the state legislature earlier this year, aims to curb access to platforms such as Kalshi and Polymarket, which critics say have become a loophole for underage gambling and unauthorized sports betting.
The initiative was driven in part by concerns raised by teachers and parents about minors downloading and using these apps. State Representative Emma Greenman, a Democrat and voting-rights attorney, said the issue only emerged prominently after 2025, highlighting a new vector for gambling activity that Minnesota had not previously regulated. “This wasn’t a problem we had, frankly, before 2025,” Greenman noted. She emphasized the measure’s intention to address both public safety and health risks associated with unregulated betting among youth.
The bipartisan bill, which Greenman helped introduce and shepherd through the legislature in the spring, prohibits the operation and promotion of prediction market platforms within Minnesota. The state’s approach is intended to prevent what lawmakers characterize as a de facto form of illegal sports wagering, since Minnesota has never legalized sports betting.
However, the new law immediately faced legal opposition. The companies operating the prediction markets, joined by a federal regulator, filed a lawsuit challenging the state’s authority to impose such restrictions. A federal judge has granted a preliminary injunction delaying enforcement of the law while the case proceeds, leaving the legislation’s future uncertain.
The ongoing dispute places Minnesota at the forefront of national debates over the regulation of emerging online betting markets. Supporters of the ban argue that prediction markets pose significant risks to minors and undermine existing state gambling laws. Opponents contend that the platforms provide legitimate financial and trading opportunities protected under federal regulations, and that state-level prohibitions could set a precedent for broader conflicts over internet-based financial services.
As the court case unfolds, Minnesota’s efforts to regulate prediction markets could have implications beyond its borders, influencing how states approach online gambling and betting app oversight in the years to come.