Minnesota became the first state to ban prediction markets after Rep. Emma Greenman raised concerns about underage gambling and sports betting. The bipartisan bill passed this spring, but a federal regulator and companies like Kalshi and Polymarket sued, pausing enforcement. The case tests state vs. federal authority over prediction markets.

Kalshi, Polymarket, and others have exploded in popularity, alarming about 20 states. The companies and the Commodity Futures Trading Commission argue federal regulation preempts state laws. States have won some victories, with Washington and Nevada temporarily halting Kalshi. A federal appeals court recently ruled states can regulate prediction markets.

Minnesota lawmakers focused on gambling-like products, carving out weather. They were concerned after Kalshi fined three political candidates for betting on their own races. The legal battle will set a precedent on state authority.