Minnesota Bans Prediction Markets, Making Operation or Ads a Felony

Q: When a federal agency sues states to protect online betting platforms, who ultimately decides if your wager is legal?

The ultimate decider is the federal courts, with the U.S. Supreme Court likely to have the final word if lower courts keep splitting. That is because the fight is no longer just about whether a state allows sports betting. It is about who has legal authority over these online “event contracts” in the first place. The Commodity Futures Trading Commission says federally regulated prediction markets fall under the Commodity Exchange Act. States and tribes argue these products are really sports wagers and remain subject to state gambling law and, on tribal lands, the Indian Gaming Regulatory Act. Right now, courts are giving mixed answers. The Third Circuit has said Kalshi’s sports event contracts likely qualify as swaps under federal law, which could preempt state gambling rules. But federal judges in tribal cases, including Wisconsin, have signaled that these contracts can still be treated as sports wagers under IGRA, and that online bets occur where the bettor places them, not just where a server sits. That means legality currently depends on where you are, what court has ruled there, and whether tribal land is involved. A federal agency can sue a state, but it cannot settle the issue by itself. Judges must decide whether Congress clearly gave the CFTC power to override state and tribal gaming systems. Unless Congress rewrites the law, the Supreme Court is the institution most likely to settle whether these wagers are legal nationwide.

3 articles · Updated · Native News Online · Jun 15

Minnesota became the first U.S. state to ban prediction markets outright, with Gov. Tim Walz signing a measure that makes operating, hosting or advertising the platforms a felony.
100-32 in the House and 57-9 in the Senate, the bipartisan votes reflected concerns that sports event contracts function like betting while sidestepping state and tribal gaming oversight.
90% of activity on Kalshi is estimated to be sports betting, and the American Gaming Association said in May that states and tribes have already lost more than $1 billion in gaming revenue.
Tribal concerns are also moving into court and Congress: four New Mexico tribes sued Kalshi in May over IGRA violations, while lawmakers warned in April that treating sports contracts as financial products could weaken tribal exclusivity.